Thursday, July 19, 2012

The Daily Note - Earnings Plays

*****Not everyone can work the action on earnings plays. It takes extra hard determination, steel will along with total commitment to stick to what you see and keep the rules. It can also bring gain and loss with equal speed in the same split second.

Trades on earnings are just too quick to enter as the announcement is released. Most people play it as pure reaction and don't plan their plays, but I say you have to let it unfold to your plan. As the announcements are released, wild fluctuations can happen and deciding your trade at that time becomes emotional as well as nearly impossible. Trading becomes fast and momentum furious. So as you quickly try and catch a trade you may end up missing the action at best or far worse, getting a fill that is way off. The execution is important.

My Earnings Play list is planned before announcement and allow for a possible hit long or short without triggering the opposite play. Targets are planned according to possibilities and not dreams. In other words, I have a price target set up as well as an entry target. The idea is to not shoot the stars or the moon but to find a realistic target price, set it up and let it play out. Then be sure to manage the out well, based on what you already determined prior to the action.

Like in all trading styles this too takes practice. Learning to set up the entry and exit is the best friend you can have which is part of the preparation. Then, once the trade is entered, it is important to say in the moment because it's where you have most control. Stay in control of your emotions, and your targets; know what you want, don't let that target fluctuate. You are allowed to change your mind and take a lesser target on your list, but allow for the play to continue and use the lesser target for your stop. Just know that the more you control your trade the more satisfied you'll be with the outcome.

Night Air by Jamie Woon on Grooveshark
Happy Trading, Living and Dancing

The Daily Pick - Earnings Plays ©DayTrading with Anni 2012 All Rights Reserved

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