Spreadbetting FTSE350 companies - using Results plus TA

[tomorton]

This is a strategy I have used before and had some success with back in the day.
We've all seen the dramatic price changes that can sometimes follow company financial results.
It's not low-risk but this can be used as the core of a trading strategy.

I'm going to run this thread as a journal of TA opportunities rather than actual trades. I'll flag up in advance the dates when results are released for FTSE350 companies and I'll suggest which might be bought or sold, in order to take advantage of price movements based on these results.

Getting in long or short will be mostly driven by the recent D1 price trend for the share, I will certainly not be reading or analysing the results, though broker consensus might be of use.

For this campaign I don't propose to use bracketing buy and sell orders, I want to keep things simple, and be either long or short. That will affect risk - but let's see what the roller-coaster does.

 

[tomorton]

So, what are we trying to do?

Looking back at the week, Telecom Plus released Finals on Tuesday 23/06. Price on D1 shows a consistent downtrend, starting around the release date of the 25 Finals. Price by Monday night was below the 20EMA which was below the 50, and both likewise trending downwards. This is a FTSE250 share so an eligible target for a short. Most prices in consistent downtrends tend to fall more often than they rise: this makes this a short for me. Of course it's possible price could have jumped higher on Tuesday, maybe because of some bullish data in the Results. It's OK if you want to cover that possibility, perhaps with a Buy order, but then you'd be long after one bullish day in a 12-month downtrend, not somewhere I would want to be anyway.

The aggressive approach on TEP would have been to go short at the Close on Monday, at about 956. New traders take note - Spreadbetting firms block live trades on company shares after market Close at 4:30pm, so although an entry order could be set after that time, you wouldn't know whether this had been triggered or even at what exact price until the next morning.

Less aggressive would have been to set a short below Monday's low.

Most cautious would have been to wait for Tuesday's Open and see what the market does. New traders - Note that Results are normally released at 7:00am, the stock market opens at 8:00am, but it's common for spreadbetting companies to block live trading until a few minutes later: this probably won't show as a blank period on their charts - the only way to be sure is to watch live.

In this case, price gapped from Monday's Close to Tuesday's Open, quoting at about 783. It was a wide-ranging day with price moving between 820 and 642, closing at 710.

So the potential gain would have been between based on a price move of between -14% and -32%, with the change between the two closing prices at -25%.

What about risk? Where would the stop-loss be placed? That's the million dollar question.