Hi, I would like to hear everyone thoughts on a beginner strategy I have been working with. Few people know I am big on Stocks, especially earning reports. Usually the earning reports on a 1D or 12H chart will be the highest votality movers over a long term. I also trade on postmarked so I hold trade overnight to not be blocked as a PDT trader.
The strategy is pretty simple and straight forward. Every day I look at earning reports. There are around 100-250 companies each day. I will look at the long-term trade of that specific stock at a 12H to 1D chart. My theory is if the stock has a positive long-term history (let’s say Super Trend has been trading for a long time green or red) a earning report is not going to make any difference. It’s just going to accelerate the volume for that specific day. I am placing around 50-100 trades so I migrate my risk.
If I place a trade in the direction of the trend, usually 8/10 trades I will be correct for some reason. It dont matter what the earning report says if the stock is trading for a long time in a specific trend therefore it’s a good day trading oppertunity.
I think also wealth accumulation strategies work pretty good. Espeically Storachi RSI on forex and crypto but prior to a earning report I found Supertrend or similiar ATR indicator work better
Have you considered using options for this? I think you’re looking along the right lines and you’ve some good ideas. I’m not saying options is the way to go for you but it’s worth exploring as there’s some great earning reports plays you can do quite quickly, long straddles are a great play for these and used to do something similar before I got into IC and Strangles at various VIX levels.
Thanks Christopher. I will explore into options because of FINRA laws regarding pattern day trading. Does options have the same invetory of stocks or is it mostly like top 100 most popular USA companies like a few CFD brokers? Do you have a favorite broker right now?
Actually, I agree with your point. My strategy would probably be better with a options broker from what I have watched other traders do. However, it still falls under pattern day trading. But right now I can just place the trade overnight but ofc if I had the oppertunity to control my trade during earning hours that would benefit my strategy a lot. Right now only Futures allow me to do that
I do earning reports like a scalp trade. I look at 1 Day chart to see if earning report has been in long positive or negative trend then I will usually day trade the stock next day. Since I am doing 50-100 trades per day I am following statistics that I am at least 80% correct most time. The prediction part is not a problem.
Trading on forex and crypto you need to margin your trades a lot. I can trade crypto on a 30M window but each time that small direction happens you must 50x your investment for that small move to be profitable.
If we had a breakout calculator everything would be easy right. But then on crypto and forex we dont have it. Its open 24/7.
But with stocks are breakout alerts available based on dividens, earning reports, news report etc. Makes it a lot easier to trade. Since everything trades on the long-term trend
There is a breakout alert on forex and crypto somewhere on the internet. But with USA earning reports you have 100 breakout alerts given for you for free all year round
I’m UK based so unfortunately I don’t have the luxury of trading the underlying with options, instead I have to use IG Index and spreadbet options. If I was US based though I’d go with TastyWorks (TastyTrade), great platform and really helpful YouTube videos. You need an appropriate sized account to trade options and to understand your BP (buying power) but for earnings reports options are a great tool to maximise profits. You can even look at things like directional or calendar spreads in addition to long straddles.
I’ve not really looked at earnings reports from a purely directional basis, long/short, it’s definitely a plan or strategy that you really make your own though, that’s they key I think with trading, find something you can repeat over and over again that you can write down and really understand.
Grid trading gets a bad rap in a lot of forums but if handled correctly is a pretty powerful tool that you could look at for earnings. You’d need to be wary of whipsaws if you’re using an averaging down strategy but the beauty of grid trading is you can either be a trend follower or more of a mean reversion type. I had some fairly decent success with grid trading a while back, it takes the headache out of choosing direction and all you’re really doing is managing risk. Just need to go into it with open eyes and understand the market dynamics carefully.
I am also based in Europe but I live in Thailand. I am thinking maybe moving to USA next year.
Right now I have a few brokers like alpaca.markets and Interactive brokers. I look into IG before but their commisions are different in England and Europe. Actually right now Robinhood is open for UK customers and they offer both cash or margin account. To go around PDT, you must trade overnight. All their companies are registered with FINRA.
TastyTrade my phone dont work with it. They block my account and since my phone never support Google Authenticator I must apply send them a email to unlock my account. Robinhood and Alpaca.markets dont care if you lose your phone in a bar somewhere as long you dont withdraw money.
Anyway, as you mention. The edge is in the stastitics. If you a method that makes 20% mistakes and 80% winning trades. You are 100% winning in a single day. The problem with trading USA stocks is being a Pattern Day Trader
The rule is to secure you as a trader so you dont disappear $25k in a single day. Therefore they want you not to open and exit same trades in a day. They prefer you hold a overnight position for your own security
Any broker which is not a offshore broker is a FINRA registered broker. IG is, but I am not sure. Robinhood, Alpaca and Interactivebrokers is 3 brokers that British customers under a regulated account
I am intrigued as I trade heavily in stocks as well. I have always considered trading earnings reports as gambling, but your strategy puts the rule of probabilities into play here.
Where are you getting these statistics?
You should do your own back testing if you haven’t already, and try to get some solid data. You have to factor in volatility as you already know, because even if you’re right, you can easily get stopped out due to whipsawing PA. So, you might actually be better off letting the trades run longer to take advantage of trend continuation.
@MattyMoney Hi MattyMoney. Thanks for asking the question.
Lets explore into statistics. Half these companis are going to trade over 500% what they traded before. A earning report is going to accelerate the volume and price volatility.
When you start to automate this you find a few companies that accelerate a lot faster than other companies… So every day you will be more in more profit than day before
I agree. I get killed when I can not control my trade in pre-market or post-market.
However, when you look into the overall statistics the earning report day is probably the best day to make a gambling decision. That’s how a lot of people have made a lot of money in the markets
