How to trade when earnings are due
Dave Landry is principal of Sentive Trading, a money management firm, and a
principal of Harvest Capital Management. Mr. Landry is the author of two top
selling books,
>Dave Landry’s 10 Best Swing Trader Patterns And Strategies and
>Dave Landry On Swing Trading.
If you would like a free trial to Dave’s Nightly Swing Trading Alerts Report
Should You Exit Your Positions When Earnings Are Due?
I seem to get the above question over and over, especially when I recommend a
stock when earnings are due. My answer? No! I believe that surprises generally
happen in the direction of the major trend. Therefore, longer-term, if
you’re not willing to hold through earnings, you won’t catch these
surprises. Will you occasionally get whacked? Well, as my friends in Fargo say,
“you betcha!” (and you’ll feel like “your friend there in the
wood chip-PER”) This is where a damage control play comes into
play.Â
Bonus Point(s)
Speaking of trading into earnings:Â Let’s look at our example de jour–Potash
(
POT |
Quote |
Chart |
News |
PowerRating), mentioned recently in my trading service (is it just me, or do you
also get hungry when you trade this stock?). As mentioned in the past, I use a
VERY simply money management system (as described in my Swing Trading Primer,
email me if you need a free copy) but do look to “improve” upon it
through discretion.
Notice POT triggers an entry and then subsequently gaps below the profit
target (again, as described in my Swing Trading Primer). In a situation like
this you can take partial profit or, wait to see if the stock quickly finds its
high and then resumes its sell off. I like to do the later. This is, as my
friend Aaron calls it,is going for the “bonus point.” Notice that POT
continued to slide. As you can see, an “improved” exit of an
additional 1, 2, 3, or even 4 points could have been captured by allowing the
stock to continue to run.
I covered the above in more detail earlier today (Thursday) during my weekly
audio/visual presentation. I also covered market conditions, sector conditions,
and even an example of a loss! (shocking I know)Â Email me if you would like
a free link or click here to
view it.Â
Housekeeping
*I answer all emails but remain a little backed up. Thanks for your continued
patience.
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. If you would like a free
trial to my trading service, click
here.