earnings release trading strategy
Earnings Release Trading Strategy capitalises on the fact that it takes institutional investors days, weeks or even months, to buy or sell stock, because of the large quantity of volume they wish to acquire or dispose of. This gives retail investors a unique intraday opportunity to be able to quickly buy stock early in the day and sell it to institutional investors at a profit before markets close.
Follow the steps below to use this strategy.
- Spot a stock that is gapping up after good news. Such as, a positive earnings report.
- Wait for the market to be open for 15 minutes and note the stocks price.
- Send through a ‘limit order’ to buy stock for noted price.
- If the limit order isn’t filled within another 15 minutes, cancel ‘limit order’ and move on.
- If your ‘limit order’ is filled, continue to hold and then sell stock before market close.
- Sell the stock immediately if it trades below noted stock price from step 2.
Below is a image of different types of gaps for those unsure of what a gap looks like and to see why it’s important to follow all steps mentioned above to avoid substantial downside losses as this strategy isn’t always profitable.
Licensed under a CC BY 3.0 licence.
If this day trading strategy is new to you, we would highly recommend the use of a demo trading account, to assess weather this type of strategy is or isn’t for you as it won’t be suitable for everyone.
Earnings Release Trading Strategy Conclusion
We hope you enjoyed reading Earnings Release Trading Strategy. Click on the button below to read Initial Public Offering Strategy.