Spyder, would you say that waiting until *after* the news is out would be prudent? It seems like even though there was a really good canonical LBDU buy signal today it could all go in the crapper in an instant.
Spydertrader's Jack Hershey Equities Journal II
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Spyder, would you say that waiting until *after* the news is out would be prudent? It seems like even though there was a really good canonical LBDU buy signal today it could all go in the crapper in an instant.
The prudent path with respect to trading on Earnings Releases depends on your tolerance for risk. Looking at the IPSU chart (See Attached), one has the impression certain individuals had information earlier than others. If you decide to trade Earnings Stocks (either before, during or after the announcement), you need to understand the amount of risk involved. We have seen time and time again a company lose more than have its value after an earnings announcement. Similarly, we often see a huge run up in Price just prior to an announcement from another company. As long as you understand the higher levels of risk associated with trading around these time periods (and don't allow your emotions to alter your thinking), you can profit handsomely during such days. However, one could just as easily lose a significant portion of one's trading capital if things do not go according to plan.
As a result, I advise new traders to avoid environments where a more experienced trader might thrive. Earnings announcements represent the exact environment a new trader should avoid until such time experience has provided a great deal of input into the daily plan.
Just my 2 cents.
- Spydertrader
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1152720>
Just for comparison, GMXR also announced earnings today - about the same time as IPSU. See the attached 30-minute chart of GMXR as an example of what can happen around Earnings Release time.
- Spydertrader
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1153183>
- Spydertrader
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1153183>
Hey Spyder:
What you have given away here is a nice short signal for stocks scheduled to release earnings.
Specifically when earnings are released volatility collapses. This happens to some extent no mater whether the report is good or bad, because THE UNCERTAINTY IS RESOLVED, and people go back to holding or trading as they were before the report. The way I see it, those of you who want to take advantage have a couple of choices;
1. Sell options premium (sell expensive calls)
2. Buy options premium (buy puts if you think the move has legs)
3. Trade the underlying short for the scalp or the position.
The options strategies can be executed short term (a month to a week before the report)
The short term trade on the underlying stock right before the release if you see a nice entry point.
Good luck in the Markets folks
Steve
What you have given away here is a nice short signal for stocks scheduled to release earnings.
Specifically when earnings are released volatility collapses. This happens to some extent no mater whether the report is good or bad, because THE UNCERTAINTY IS RESOLVED, and people go back to holding or trading as they were before the report. The way I see it, those of you who want to take advantage have a couple of choices;
1. Sell options premium (sell expensive calls)
2. Buy options premium (buy puts if you think the move has legs)
3. Trade the underlying short for the scalp or the position.
The options strategies can be executed short term (a month to a week before the report)
The short term trade on the underlying stock right before the release if you see a nice entry point.
Good luck in the Markets folks
Steve
I noticed that Neu exceeded LBDU around 10:00 am this morning. When I look at the chart the first bar is really tall. How much "gap" in the first minutes of trade excludes the stock from consideration? I was going to attach a picture of the chart from medved quote tracker but haven't figured out how to capture them yet.
Long NEU $51.89 at 10:30
Looks like it's heading for Average DU by 11:00: a promising sign.
Looks like it's heading for Average DU by 11:00: a promising sign.
A long first candle (See attached NEU 30 minute chart) does not constitute a 'gap' in price. No candle present (or a large space) constitutes a 'gap' in price. Again, playing the 'gap' stocks requires more experience than normal beginning traders possess. One needs to determine the odds of a 'filling gap' vs an equity which shows strength and continuation of the price trend. For beginning traders, I recommend avoiding gaps above 10% and remaining very cautious with gaps between 5% and 10%. However, Your mileage may vary.
According to my charts, NEU triggered a buy signal as actual volume exceeded LBDU around 10:00 AM this morning. Price at time of signal generation held at $51.33 USD. To anyone who grabbed onto the NEU trade, nicely done.
- Spydertrader
Thanks for the info Spyder. Everything looked good to me at 10 but I wasn't sure if the big jump at the open excluded it from consideration. When I look at a smaller time frame, 1 or 5 minute bars, I can see that it actually just ramped up really fast, there wasn't actually a "gap" at the open.
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1154138>
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