Very soon we will be in the earnings season. As all of you know I have written extensively on this topic and detailed what is involved in it. If you really apply yourself , you can easily find 5 to 10 very good trades during earnings season. Trades which will give you anywhere between 20 to 100% plus returns in few months post entry. This is one method if you master, it gives you dividend 4 times in a year.
The trick in this is to prepare well in advance and think through what you want to achieve . Some traps people fall in to while trading earnings are:
1 Making it very complex. I have seen spreadsheets so complex to track earnings, that I don't know what the trader is trying to achieve. When the earnings spreadsheet was up I use to get so many request for adding column or information to it that it would have easily become 100 column spreadsheet.
2 Trying group collaboration. It does not work. If you want to trade this and want to really make money, forget depending upon someone to update the databases. Do it yourself. I do this entire thing without spreadsheet, I just write earnings next to symbols on a small pad and feed selected list in watch list for next day.
3 Searching for perfect sources of information. Please understand it is what it is. For retail traders there are no easily available and timely source of information. So within the constrains one has to innovate. There is sufficient opportunity to exploit in spite of limited databases.
4 Falling in love with a stock. A stock might show 10000% growth and if it is not surprise to market, it will not react or go down.
5 Not ready both mentally and in terms of method well before the earnings season. You have to do all the thinking and planning before earnings season, if you want to trade this method. Bull market, bear market earnings trade works.
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