First Time Equity Trader Report Advice

[deco101]

Hello,

I am an experinced FX/Commodity trader, however in the past few months I have expanded into equities, in particular speculative AIM stocks (although these "hotshots" are a small part of my overall fund.

My question is: I have a very good profitable position in a current stock which has still a hugh upside, it has its annual earnings report out next week. Any recommendations on what to do before hand ? I am not used to pre-report behaviour.

So in my usual operations I will cash in profitable positions I am holding before NFP day (as I feel odds return to 50/50 which for me is a nono), and then sit back watch the fight and jump in if my original idea is still in-tact. This is in relation to FX of course which is highly liquid.

Can anyone sugest a possible approach to an earning report ?

Thanks
Deco

 

[Liquid validity]

Hello,

I am an experinced FX/Commodity trader, however in the past few months I have expanded into equities, in particular speculative AIM stocks (although these "hotshots" are a small part of my overall fund.

My question is: I have a very good profitable position in a current stock which has still a hugh upside, it has its annual earnings report out next week. Any recommendations on what to do before hand ? I am not used to pre-report behaviour.

So in my usual operations I will cash in profitable positions I am holding before NFP day (as I feel odds return to 50/50 which for me is a nono), and then sit back watch the fight and jump in if my original idea is still in-tact. This is in relation to FX of course which is highly liquid.

Can anyone sugest a possible approach to an earning report ?

Thanks
Deco

Bold highlight - same applies to AIM.
Unless there are clues to good / bad earnings (director deals, recent contract wins / losses etc.)
Also sector earnings and sector performance may be a pointer compared to
the stock/s you hold SP performance.

Another point is previous earnings reports.
No or low previous earnings suggest stock is still in R&D cash burn phase,
I wouldn't touch it at all.
Seen to many like that in AIM - constant dilution, new shell / holding companies etc.

 

[deco101]

Thanks for the feedback - well its a big company so in this particular case its not a startup as such, shall we say its a huge company coming out of the doldrums, from what I read positive noises for the report.

May reduce my position....lets see...

 

[Liquid validity]

do you know for certain if the earnings report is going to be good or bad and do you know for certain if the expectations from the bigger players holding stock in this company are for it not to be better/worse than will be reported if you do and you can with the same degree of certainty predict the likely impact on price and that is in your favour then stay with it

Not really any certainty with anything, insider info aside.
Although in that case the info may be certain, but then so are the repercussions if caught...

Thanks for the feedback - well its a big company so in this particular case its not a startup as such, shall we say its a huge company coming out of the doldrums, from what I read positive noises for the report.

May reduce my position....lets see...

If those positive noises are coming from other stock forums (iii etc.),
take it with a large pinch of salt, same with press or brokers.
Other than that, see inside info comment above.

Not saying you should reduce or close, just be careful about
believing what you read, especially with AIM and forums.
Those that claim to be 'in the know' are usually BS,
or have ulterior motives:
http://www.investegate.co.uk/Article.aspx?id=201008091219577602Q
http://www.investegate.co.uk/Article.aspx?id=201008090700137262Q

Those are old cases that highlight the kind of crap that goes on
in stock forums, particularly illiquid AIM.
I wouldn't put too much weight on stuff you read...

 

[deco101]

Not really any certainty with anything, insider info aside.
Although in that case the info may be certain, but then so are the repercussions if caught...



If those positive noises are coming from other stock forums (iii etc.),
take it with a large pinch of salt, same with press or brokers.
Other than that, see inside info comment above.

Not saying you should reduce or close, just be careful about
believing what you read, especially with AIM and forums.
Those that claim to be 'in the know' are usually BS,
or have ulterior motives:
http://www.investegate.co.uk/Article.aspx?id=201008091219577602Q
http://www.investegate.co.uk/Article.aspx?id=201008090700137262Q

Those are old cases that highlight the kind of crap that goes on
in stock forums, particularly illiquid AIM.
I wouldn't put too much weight on stuff you read...

Yes point taken - I have a bloomberg subscription so the news sources are "slightly" better, but yes filter all opinions carefully. The stock is pretty liquid compared to most smaller stocks - I guess its just the uncharted waters of Company reports which is the challenging bit for me.

Thank you for al your input on this.

Deco

 

[thomcooper]

You say it still has huge upside. Presumably you have a target price? Why not take your profits now, sit ready to dive back in when the report comes out. If the report is bad & it drops, then you've lost nothing. If its good & it costs you 10% before you get back in, then you're still buying an undervalued stock that you like.

Treat them as 2 different trades. Similarly, if you can take out your original investment + an acceptable %ROI & still sit with a speculative position, you've still won. You can dump the full investment in after the report breaks as necessary.

 

[deco101]

Thanks Thom - So I cashed in the stock - it briefly carried its upward search (another 3%) but fell back 2% today, im not in the business of guessing tops and bottoms but it was overbought on a Daily chart.

Just waiting to jump again after the earnings report.

20% in 3 weeks made which was nice.

Your advice mirrors my own strategy before NFP day with currencies.

Thanks Again.