EXTR , Earnings notes , strategy rules clarifications needed
This is a perfect example to fine tune earnings based rules for entry . I think todays gap down is all too familiar in the stock market around earnings and thus not too hard to avoid .
My strategy, although it try's not to trade too close to a stocks earnings , does not have concrete rules for
1) max days I can take a trade pre earnings
2) How much of a de risk or how much up I need to be to hold through earnings
This is a personal note for me to , print and review because I think this is a pretty normal earnings fail to plan my rules around .
Off the top of my head I think that I looks like 8 trading sessions pre earnings there are a fair amount of successful trades here , so its enough time for many stocks to derisk . 8 sessions pre earnings min is a good number .
Secondly , EXTR gapped down from this entry 8.64% which is fairly common in my opinion . I need to go to work lol , so leaving this one for further thought but ill update with a comment based on how I decide to modify my risk rules for this . Trading around earnings is def more risky but it can be done with a proper war plan , on this trade we totally lucked out , but had I been in still , what should I have done pre earnings , in this case we only hit PT1 and even if we were around PT1 the day before earning , I think that would have been too small of a move up ( 3.86% ) to hold though earnings . But I am going to do a deeper dive later .
One last thing I've learned in last three years , IT DOES NOT MATTER WHAT EARNINGS RESULT IS !!!
, all that matters is the reaction .Good reaction or bad ,we don't even need to know why , in this case its probably because although EPS is seemingly good , future guidance is probably lacking growth or something . But doesn't matter reaction is bad , that's all that we need to take in here . Just my opinion but I think its important , do not be the guy buying more while the stock is clearly failing .
Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that confirms or supports one's prior beliefs or values. I think that when we see these earnings with technical failures confirmation bias is common to see exploited by many traders .
Here is an example on a stock twits post from EXTR this morning
Random person ( we don't care who this is just a near by example ) : " Crushed the results and amazing guidance. Seems like the market hasn’t absorbed the numbers. CFO leaving is no big deal and should have no impact to the SP. I definitely see this as manipulation before it’s crosses 52 week high"
Theres always tons of this kind of thinking, I have done it too ! and thats a good example but theres 10 more where that came from on stocktwits ect ect . The market is never wrong , opinions often are .
My strategy, although it try's not to trade too close to a stocks earnings , does not have concrete rules for
1) max days I can take a trade pre earnings
2) How much of a de risk or how much up I need to be to hold through earnings
This is a personal note for me to , print and review because I think this is a pretty normal earnings fail to plan my rules around .
Off the top of my head I think that I looks like 8 trading sessions pre earnings there are a fair amount of successful trades here , so its enough time for many stocks to derisk . 8 sessions pre earnings min is a good number .
Secondly , EXTR gapped down from this entry 8.64% which is fairly common in my opinion . I need to go to work lol , so leaving this one for further thought but ill update with a comment based on how I decide to modify my risk rules for this . Trading around earnings is def more risky but it can be done with a proper war plan , on this trade we totally lucked out , but had I been in still , what should I have done pre earnings , in this case we only hit PT1 and even if we were around PT1 the day before earning , I think that would have been too small of a move up ( 3.86% ) to hold though earnings . But I am going to do a deeper dive later .
One last thing I've learned in last three years , IT DOES NOT MATTER WHAT EARNINGS RESULT IS !!!
, all that matters is the reaction .Good reaction or bad ,we don't even need to know why , in this case its probably because although EPS is seemingly good , future guidance is probably lacking growth or something . But doesn't matter reaction is bad , that's all that we need to take in here . Just my opinion but I think its important , do not be the guy buying more while the stock is clearly failing .
Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that confirms or supports one's prior beliefs or values. I think that when we see these earnings with technical failures confirmation bias is common to see exploited by many traders .
Here is an example on a stock twits post from EXTR this morning
Random person ( we don't care who this is just a near by example ) : " Crushed the results and amazing guidance. Seems like the market hasn’t absorbed the numbers. CFO leaving is no big deal and should have no impact to the SP. I definitely see this as manipulation before it’s crosses 52 week high"
Theres always tons of this kind of thinking, I have done it too ! and thats a good example but theres 10 more where that came from on stocktwits ect ect . The market is never wrong , opinions often are .
艾力克~