US Earnings Season: 3 Trading Strategies
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Every quarter, US companies report their earnings.
This means that companies that have their stocks listed on US exchanges will share with the whole word just how good a job they did at earnings profits, or not.
Prices can move big and fast on these announcements, creating larger-than-usual trading opportunities.
For traders who are new to the volatility surrounding US earnings season, here are 3 simple ways to take advantage of these market moves:
1) Buy the stock = go long
You think the results will be good/better-than-expected --> tap "Buy" in hopes that the price rises --> close the trade to book in profits.
Benefit: Big upside if the company delivers, or even announces a positive shocker
Risk: "Sell-the-news" phenomenon, where investors quickly sell to book profits once positive expectations are confirmed
2. Sell the stock = go short
You think the results will disappoint --> tap “Sell” in hopes that the price falls --> you close the trade to book in profits.
Benefit: Profits when others are losing (with Bybit's stock CFDs, you can also potentially profit from falling prices).
Risk: Losses can be severe and fast - especially with leverage.
3. Can't Decide? Trade the Index
Thousands of companies release their quarterly earnings. It's a gargantuan task trying to decipher which ones would beat market expectations, and which would disappoint.
Benefit: Skip the guesswork on individual companies, while diversifying across a whole collection of stocks instead (so that one bad earnings report/one wrong pick won't sink your portfolio):
SP500 - contains 500 of the biggest industry leaders across the US economy
NAS100 - contains the 100 biggest non-financial companies, mostly tech
DJ30 - contains 30 companies that more closely aligns with the real economy a.k.a. Main Street
US2000 - contains smaller companies (not big tech) that are listed on US stock markets
Risk: Less immediate upside (smaller potential gains) for a stock index than picking that single outperforming company
Before You Trade:
Check earnings date and get in early: Earnings can move stocks 5–20% overnight. Wait and it could be too late.
Proper risk management: Never allocate more funds to a trade than you can afford/are willing to lose.
DYOR: Do your own research. This is not financial advice.
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DISCLAIMER:This article is provided for general information and reflects the author’s views only. It does not constitute investment advice, nor an offer or solicitation to buy or sell any financial instruments or digital assets. Your ability to access or use any products or services mentioned may be subject to the laws and regulatory requirements of your jurisdiction.