How to Trade During the Earnings Season

During the earnings season, traders have every opportunity to reach their full potential and make good money. But it can be difficult for beginners: movements seem too fast, risks are too high, and stocks are hard to follow. How to prepare for the earnings season to get the most out of it? We have collected tips that will be useful to both beginners and professionals.

Before the season starts

• Before the peak of the earnings season, we try to close all our everyday issues so that nothing distracts us from trading. And get a good rest before trading! 
• Increase your loss and position limits in advance. If you don't make money in the earnings season, when else?)

One hour before the opening of trading

The good thing about the earnings season is that for the first couple weeks, there aren't many reports and you have time to get caught up in the process. At the peak of the season, when about 100 companies a day are reporting, you'll have a much easier time dealing with the flood of information. Therefore:

• Start your workday an hour earlier. 
• Find an earnings calendar in any open source and put all the tickers in the portfolio. For each ticker, look at the chart and price and remove anything that is illiquid or too expensive or cheap for you. From the remaining number select 5-7 stocks you like and add them to a separate portfolio. We will work with them in the first hour of trading. 
• Determine where the daily is, look at the premarket, mark the key levels at which you are ready to sell or buy a share.

It is not necessary to look closely at the figures of the report – it can be costly for a day trader. We don't know whether big investors will want to fix profit from the gap on a good report, thus closing the share in minus. Or, on the contrary, consider that things will not get any worse and buy shares even based on a bad report. The chart will show everything, and we are not smarter than the market :)

After the start of trading

• For the first half an hour to an hour, watch 5-7 stocks that you have selected in the portfolio for the opening. It is possible that a pattern for entering a position has already formed there. If you don't like anything here, start to quickly look through the remaining ones in another portfolio. 
• During the trading day, remove stocks that have no movements so that they do not take up time. From the remaining ones, select stocks for closing based on your preferences. Somewhere there is a level, from which we can expect a good movement in the last couple of hours, somewhere we wait for a breakdown – we all have our own strategies and moments that are easier for us to trade.
• Leave everything that went down well for the next day and your fresh head. In almost every earnings season there is a pattern that repeats itself day in and day out. It could be a gap down that closes. Or it could be a stock that went negative on the premarket from a gap down, opened up, and fell some more. There are many options! Remember such moments – if the situation was repeated 2-3 times in some shares, it is very likely to happen the next day. 

Have a successful earnings season!