Every publicly traded company is legally obligated to provide reports on their earnings and current financial situation after each quarter of the financial year. Since most public companies follow the same financial year, most tend to file and announce their report around the same time, appropriately called “Earnings Season”.

Both investors and traders pay a great deal of attention to the results announced during each Earnings Season as they reveal a true snapshot of the fundamentals of each company.
All market players are given the opportunity to match expectations to actual earnings results, and while investors can monitor and make decisions on their assets portfolio, traders can take advantage of the extreme volatility that each Earnings Season causes and creates.

Although there is no legal restriction, traditionally, Earnings Seasons start two or three weeks after the end of each quarter and run for around six weeks. This means that they typically fall in January, April, July, and October.
Companies in the same industry tend to provide their reports during the same week or so, with early releases generally associated with better results than later ones.

Why is Earnings Season so important?

During Earnings Season, each company releases its quarterly figures, information, and reports on its revenue, earnings, losses, expenses, debts, taxation cash flow, EPS, and much more. In addition, very often, companies accompany their release with an “Earning Guidance” by which they reveal the company’s future projects and aspirations and its own expectations for the new quarter and beyond.

Long-term Investors may not always be directly affected by the temporary high volatility that characterises each Earning Season, but these are great opportunities to re-evaluate their portfolios regularly and periodically. During Earning Season, investors are able to find the answer to questions such as “is the company growing? Has it got potential? Is the management doing a good job? Is the demand for the company product or service growing? What are the plans and projects for the future?” and so on. Their decisions can sometimes provoke a complete re-evaluation of the price of one ticker or more and huge movements in markets already highly volatile.

Swing Traders often choose to use expectations and sentiment to take advantage of the price movement in the days and weeks prior to and following each company release.
Many Day Traders consider having short time exposure during announcements too risky but are more than happy to take full advantage of the high volatility just before and after the companies’ announcements.

How to Trade Earnings Season

As we have just seen, Earning Seasons are periods characterized by high volatility and, more often than not, by big movements in prices.

One of the things traders looks for when scrutinising charts after an earnings results release is a “gap” in the price of the correlated ticker, either to the upside or to the downside.

On a chart, a gap is identified and measured as the distance between the closing price of a candle and the opening price of the following one. Gaps normally occur after a change in fundamentals or as a consequence of a pattern breakout. During Earning Season, they often occur because financial announcements are traditionally made after the market closes, and the reopening can present a price very different from the latest recorded.

When analyzing a gap, ideally, traders would want to see it happening during a bullish trend (upwards gap) or a bearish trend (downwards gap) and know that the presence of increased volume means the trend is more likely to carry on for some time after the gap.

Trading gaps can offer great profits in a short amount of time, aided by sudden increases in buying/selling pressure and fear of missing out, which further pushes both volume and price movements.

With this in mind, let’s discover two important and popular trading techniques built around price gaps and very useful during Earnings Season.

Gap Continuation Strategies

Gap Continuation is probably one of the most potential-rich techniques swing and day traders employ during price gaps in and out of Earnings Season.

The strategy begins with spotting a gap on a chart in the same direction as the current trend, accompanied by sufficiently increased volume. Traditionally, a trend-following position is then opened just before or after the closing of the first candle that follows the gap.

Gap Continuation strategies can be extremely profitable but also risky. After an initial hype, the market can sometimes reject the new price evaluation and cause a trend reversal of an extent and duration, which are virtually impossible to predict. To manage and limit their risk while maximizing profits, traders often choose to set trailing stops when opening their positions or stop loss orders just below the wick of the candle that follows the gap.

Gap Reversal Strategies

A trader would employ a Gap Reversal strategy when he or she expects the price of a stock to move in the opposite direction of the gap or of the current trend.

Once again, Gap Reversal traders would begin by looking for price gaps on a ticker’s chart.

During Earning Seasons, gaps are more likely to be caused by a company’s earning results than by other random factors. The trader would therefore look for a price gap in the stock of a Company that has released results that surprised the market, whether positively or negatively. He or she does this, of course, expecting a reversal in price.

Many Gap Reversal traders would then look for a set-up where the last candle before the gap follows the trend while the candle that follows the gap moves against it.
In other words, for the setup to be complete, during a bullish trend, the last candle before the gap needs to be bullish, and the first after the gap must be bearish.
In a bearish trend, the opposite must occur.

The volume would ideally be higher on the candle after the gap than on the one before it. Traders would then filter the setup with a Moving average and, if successful, open the trade.
Outside of Earning Seasons, traders are more likely to wait and see if the gap gets filled before evaluating the probability of a reversal.

Momentum Breakout Strategies

Momentum Breakouts are at the center of other strategies that traders use in and out of Earning Season. It is based on generally strong movements that bring the price over the resistance or the support lines after a phase of consolidation, and this is exactly what Momentum Breakouts traders would be looking for. A sudden burst in volume and a candle that crosses and closes on the other side of resistance/support would then be the signal for a possible trade.  A trader would generally open a position at the start of the very next candle and set a stop just below the line (support/resistance) just passed.

Earning Season Summary

Earnings Seasons are very exciting times for all types of traders and investors. Great profit can be made in short periods of time. Fundamental and technical analysis come together for around six weeks, rich with potential and opportunities. Better yet, it happens four times every year!

In times like these, the strategies described in this article could come very useful and reveal themselves as quite profitable.

Gap Continuation Strategies are perfect for stocks of Companies that have announced better-than-expected results.
Gap Reversal Strategies work well with the stock of Companies that have not met expectations or, better yet, have greatly let down the market.
Momentum Breakout Strategies are useful when the market is uncertain of the earnings results that will be released and enter the market in mass after having received them.

I hope this helps. Enjoy trading!

The post Getting The Most Out of The 2023 Earnings Season appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

In this video, you’ll see Michael’s analysis and real trade execution on TSLA.

Watch how he does his premarket from 0 to 100, scanning for the right stock and finding the critical pressure points.

This is a MUST video for anyone who likes to become a pro day trader.

Watch The Market Preparation Live Trading Example

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Premarket prep: This is it!

You have reached the summarizing lesson of our Pre-market preparation crash course!

Throughout the course, we learned the most important steps you need to know to prepare yourself for the trading day, from analyzing the indices, building scanners, the parameters of the right stock we would like to trade, and how to analyze the stock that we have found, building a watchlist, and much more.

In today’s lesson, listen to Michael as he goes and shows you how it is done from A-Z.

Watch The Market Preparation From Beginner to Expert

For all the market preparation videos click here

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“Give me 6 hours to chop down a tree, and I will spend the first 4 hours sharpening up the axe”

Our classes of premarket preparation present advanced trading concepts on how to prepare day traders for the trading day ahead.

This video is part of a series on pre-market preparation for trading stocks. It focuses on the importance of understanding news and how it can impact the stock market.

Understanding News to Gain More Profit

When it comes to finding the right stock to trade, this is by far the most important topic of all.

In this lesson, Michael explains the different types of news topics. Which one is “stronger” than the other, and how to pick the best stock to trade.

Step-by-step process for pre-market preparation

One of the first things to emphasizes is the importance of following a step-by-step process for pre-market preparation. We recommend starting with market analysis, then using scanners to find the right stocks, analyzing those stocks, creating a watch list, and finally turning to the news to see what might be driving changes in those stocks. By following this process, traders can make informed decisions based on a variety of factors rather than just jumping in based on a single piece of news.

News is a crucial factor in trading because it can create massive amounts of volume and volatility in a given asset. Take the example of Elon Musk buying 9% of Twitter, which would likely cause Twitter’s stock to go up in pre-market trading. But there are many other types of news that can impact stocks, from earnings reports to upgrades or downgrades by analysts to major announcements about company acquisitions or layoffs. All traders should consider the impact of different types of news and to look for news that is likely to create strong momentum in a particular stock.

To illustrate this approach, the video shows a few examples of stocks that Michael is considering trading on a particular day. He explains how he looks at the news related to each stock and assesses the impact it’s likely to have. For example, he notes that a stock in the energy sector is dropping in pre-market trading due to earnings that came in lower than expected. He views this as a potential opportunity to short the stock if it drops below certain support levels, based on the analysis he’s already done. On the other hand, he points to another stock that’s gotten FDA approval for post-marketing activities, which he sees as a positive catalyst that could drive the stock up. He notes the high volume and momentum in the stock and suggests it might be a good candidate for a long trade.

Understanding the News – Summary

It is important to have a systematic approach to pre-market preparation and use news to inform trading decisions. News is just one factor to consider and it’s important to do thorough analysis of each stock before making a trade. By following these guidelines, traders can increase their chances of making profitable trades and avoiding costly mistakes.

If you want to prepare yourself in the best possible way for intraday trading check out our other posts about pre market.

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“Give me 6 hours to chop down a tree, and I will spend the first 4 hours sharpening up the axe”

Funded Trades Now For You classes of premarket preparation are demonstrations of advanced trading concepts on how to prepare day traders for the trading day ahead.

Watchlist For Intraday Trading

In this lesson, Michael explains why you should build a watchlist, how to create the right one for your trading and where to get the data from.

If you want to prepare yourself in the best possible way for intraday trading check out our per market category

The post How to Build a Killer Stocks Watchlist For Your Intraday Trading – Part 5 appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

“Give me 6 hours to chop down a tree, and I will spend the first 4 hours sharpening up the axe”

Funded Trades Now For You classes of premarket preparation are demonstrations of advanced trading concepts on how to prepare day traders for the trading day ahead.

Analyzing stock for optimal results

In this lesson, Michael explains how to analyze a stock that you pick for optimal results in Day Trading.

Make sure to have a system that will guide you when building scenarios for the trading day before executing a trade.

Watch the video on how to analyze the market before the opening bell.

The post How to Analyze A Stock For Optimal Results in Day Trading – Part 4 appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

“Give me 6 hours to chop down a tree, and I will spend the first 4 hours sharpening up the axe”

Our premarket preparation classes are demonstrations of advanced trading concepts for preparing to the trading day ahead.

Hunting The Best Stocks

In this lesson, Michael explains the parameters you need to pick the best stocks for your trading day.

How to find the best stocks to trade

In this lesson on pre-market preparation, we focus on how to find the right stock to trade. The video emphasizes the importance of adequate preparation to succeed in trading and suggests spending at least an hour or two before the trading session analyzing the market and understanding the sentiment and news that move the market.

How to start

The first step in finding the right stock is using scanners, like we covered in the previous lesson. We recommended looking for stocks with a lot of volume and a strong momentum move in either direction.

Analyze the market

The video demonstrates how to use pre-market movers and identify a few stocks worth watching. It’s best to skip over lower-priced stocks and focus on those with a higher value.

After that you should analyze the stocks further by looking at the news and identifying specific catalysts that may affect the stock’s price. It is important to understand why the stock is moving in a particular direction and determin if the news is specific to that stock or a broader market trend.

Example

Using NVIDIA as an example, the video shows how to research the news and understand why the sentiment is negative, and the price is dropping. It discovers that Baird downgraded NVIDIA to natural from outperform, which explains why the stock’s price is dropping.

Summary

Finding the right stock involves using scanners to identify stocks with a lot of volume and a strong momentum move. Analyzing the stock further involves researching the news and identifying specific catalysts that may affect the stock’s price. The video emphasizes the importance of understanding the sentiment and news that move the market to prepare adequately for trading. By following these steps, traders can increase their chances of success in the stock market.

Read more about pre market preperation on our blog.

The post How to Hunt For The Best Stocks to Trade Today – Part 3 appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

“Give me 6 hours to chop down a tree, and I will spend the first 4 hours sharpening up the axe”

Funded Trades Now For You classes of premarket preparation are demonstrations of advanced trading concepts on how to prepare day traders for the trading day ahead.

Picking The Best Stock to Trade Intraday

Scan the right way to Get Better Results:

In today’s lesson, we covered the 2nd principle when it comes to finding the right stock for day trading.

In the video, Michael explains why it’s important to use scanners, how to use the built-in scanner in the platform, and how to build your own to get the selected few for each trading day

In this video, Michael continues the session on how to prepare for every single trading day. In the previous session, we talked about how to analyze the market, including the S&P, the Nasdaq, the Dow Jones, and the VIX. In this session, he focuses on another important aspect of market preparation – scanners.

Scanners are a vital tool for traders as they help to identify stocks that are moving up or down with significant momentum and volume. Traders are always on the lookout for stocks that are volatile and have a lot of liquidity, as this makes it easier to buy and sell shares. The FTNFU platform offers a scanner that traders can use to analyze the market, but you can also use other platforms like TD Ameritrade or TradingView if you have a paid account.

Before using a scanner, it’s important to understand what you’re looking for. Traders are interested in stocks that are moving up or down with a lot of momentum and volume, rather than flat-lining. It’s also important to find stocks that are volatile and have a lot of liquidity so that you can buy and sell shares easily.

To get started with scanners, you can look for the top gainers and top losers in the market. This will show you the stocks that are moving the most, even if they don’t necessarily have a lot of volume. Another option is to use a pre-market mover scanner, which will show you the stocks that are moving strongly before the market opens.

For example, if you’re using the FTNFU platform, you can click on a stock that’s showing strong momentum in the pre-market, such as ADGI. By clicking on the stock, you will be able to see its pre-market chart, which will show you how the stock is performing before the market opens. This information is useful because it can give you an idea of the direction the stock is likely to move in once the market opens.

In addition to using scanners, it’s also important to keep an eye on the news. This is because news events can have a major impact on the stock market and individual stocks.

On The Next Pre-Market Session

In the next lesson – “Hunting the best stocks“, we will cover this topic in more detail, but for now, it’s important to understand the importance of staying informed about what’s happening in the market.

In conclusion

Scanners are a vital tool for traders who are preparing for the market each day. By using scanners, you can identify stocks that are moving up or down with momentum and volume, and get a sense of the direction the stock is likely to move in. By combining this information with news events, you can make informed trading decisions and increase your chances of success in the market.

To learn more about this, watch our Pre Market Prep category on our blog!

The post How to Scan And Pick The Hottest Stock to Trade Right Away – Part 2 appeared first on Funded Trades Now For You - Stock Trading Prop Firm.

Our premarket preparation classes showcase advanced trading techniques for day traders and giving them the necessary skills to face the trading day ahead.

Analyze The Market to Get Better Results

In today’s lesson: Analyze The Market, we covered the first principle when it comes to being ready for the trading day and trading week.
In the video, Michael explains why it’s important to analyze the markets, which assets to analyze, how to do it the right way and how to use the VIX as a key player in reading the market behavior.

This video is the first part of pre-market preparation, which is how to analyze the market and be prepared before the opening bell.

Market Analysis

As a trader, one of the most important things to do is market analysis. There are three major markets that we need to cover: the NASDAQ, the S&P, and the Dow Jones. We will also analyze the VX to see its opposite correlation with the S&P. When it comes to analyzing the market, the first thing to do is to learn the price action without any indicators or moving averages.

We will be using the NASDAQ 100 chart as an example. When we zoom out a bit, we can see that the price moved up strongly, which is a great indication that buyers are strong. We mark the places where we think the sellers might come in and the price might drop. This is one of the resistance levels that we can play with. On the downside, we mark the support levels that will help buyers come in and push the price higher.

We will then analyze the 1-hour chart and the 15-minute chart to see if we are missing anything from the 4-hour chart. For example, we want to see how the pullback looks like when the price is moving higher strongly and then pulls back. If we know that the price will reach the resistance level and drop, we can go short either on the market or other stocks that we will find that are capable of shorting when the market reaches its resistance.

Conclusion

Market analysis is a crucial part of pre-market preparation. It helps us understand the market conditions, identify potential resistance and support levels, and make informed trading decisions. By analyzing the NASDAQ, S&P, and Dow Jones, we can get a comprehensive view of the market and make more informed trading decisions. As we continue to trade, we will find our own niche in market analysis and develop our own strategies.

For more Pre-Market Perperation vidoes visit our youtu channel

The post How to Analyze The Market Before The Opening Bell – Part 1 appeared first on Funded Trades Now For You - Stock Trading Prop Firm.