Few good earnings trade can change your life

Of all the methods I have traded so far in 14 years, the method that has made me the most money in absolute dollar terms in shortest period of time is Earnings based Episodic Pivots. The method can double or triple your account in just few weeks. It infrequently produces good candidates but those good candidates can make your year or sometime they can make you 3 to 5 years worth of profit in few weeks.

The starting point to developing the earnings breakout method was one big trade in USLB. In the beginning of 2001 I found a trade that helped me decide to become full time trader and since then I have never looked back.

During the earnings season I found this small stock with multi month neglect that had triple digit earnings. It gapped up on that news and I bought the position with entire capital I had at that time plus some margin. Subsequently I added to the position around 9 and liquidated the position between 14.50 and 14.

In 11 weeks I made 4 times more money than I was making in a 100000 a year job. Once I closed the trade I made up my mind, never to work again for someone else. If I can make 4 times my salary in few weeks all that I have to do is find 4 to 5 trades like this in next decade was the thinking. And that decision has paid of.

On an average I find one good trade like this in a year. Some years you find 10 to 12 such trades , some years you find only 1 or 2. The trick is to wait for all stars to line up for these kind of trades and then risk sufficiently big amount to make a difference. Last year FB made lots and lots of money for me and my friends for whom I help manage money.

Unless you really find a big earnings trade like these you will never be convinced of the power of these trades. The kind of explosive moves. In 2007 in September I saw a Chinese company announce earnings and they were blowout earnings with triple digit sales and earnings growth. I bought big on margin around 14 price . In 13 days I sold the stock for 38 as it gaps and started reversing.

Over the years I have developed structured method to find these kind of trades during earnings season. And over the years after catching some of these big moves and systematically studying some past big movers and talking to others who also trade similar ideas I have a much better understanding of what to look for in these kind of candidates.

Big moves start during earnings season and if you track them you can find some real big trades that can forever change your life....


ANS said...

Hello Pradeep,

Is the structured method you talk about, the Episodic Pivots method?

Pradeep Bonde said...

Yes and there are more learnings and modification to it after the Stockbee Advance Bootcamp.

FX Crusader. said...

Hi Pradeep,

Mind sharing which broker(s) do you use for all your trading ?

Pradeep Bonde said...

I use IB Tdameritrade and Fidelity for my trading.