How To Trade Around Earnings Reports With Maximum Profits And Low RiskPrint This Article
Mar 25, 2013
The challenge of trading around quarterly earnings reports
When I first began my trading career about 15 years ago, I had no idea how to manage trades that coincided with the quarterly earnings reports of various stocks. Whenever I simply held my positions through earnings and hoped for the best, I was somehow wrong a majority of the time, and the stocks gapped sharply against me. Conversely, I found that I missed out on a lot of potential profits whenever I simply stood aside and let the stocks react and do their thing after earnings.
Fortunately, many years later, I discovered a system for trading around earnings reports that enabled me to have minimal risk, while still capitalizing on the majority of the gains. It became the best of both worlds, and that is what I want to share with you in this article, using an actual recent trade example.
How we traded LinkedIn Corp ($LNKD) for a total 22% gain around its Q1, 2013 earnings report
Throughout January and February of this year, we made two separate swing trades to buy LinkedIn Corp ($LNKD) in The Wagner Daily newsletter. The first $LNKD swing trade netted a gain of 11% over a 14-day holding period. Our second trade in $LNKD also scored an 11% gain, but over just a 9-day hold.
What’s notable about that total 22% gain with a total holding period of 23 days is that the trades were made ahead of and immediately after the quarterly earnings report of $LNKD.
In the 4-minute video below, we walk you through the Earnings Trading Technique that enabled us to lock in these solid gains, despite both trades being centered around earnings reports. For best quality, view the video in full-screen HD mode by clicking the icon on the bottom right of the video player window:
If you would like to learn more about our disciplined, rule-based trading methodology, there are two things you may want to check out: our online Swing Trading Success Course and our nightly Wagner Daily ETF and stock picking report.
Have you got any questions about our Earnings Trading Strategy? Have you got a better way you want to share? Drop us a comment below.