Stock Earnings: Everything Traders Need To Know


– As day traders and swing traders, we love stocks with earnings but there’s a lot of
things you need to know as well as avoid. (energetic music) Be sure to subscribe to be notified as soon as one of these
new how to videos hits. Below, let me know, do
you trade earning stocks? Let me know yes or no in the comments. Many of you might have found this video because you’re looking
to trade earnings stocks. Whether you’re watchin’ CNBC, whether you’re on Twitter, anywhere, maybe it’s the main stream
media news, you’ll hear about a stock announcing
earnings and moving big. And you’re wondering, okay, how can I capitalize on that? There’s a couple things
that are often misunderstood that I wanna break down today. So, the first is we love to
trade earnings winners, okay. Sounds good. Stock is an earnings winner, sounds like it made a lot of money, sounds like the future prospects are big, but the biggest thing you need to focus on is when we in day trading
and swing trading circles talk about an earnings winner, that does not necessarily
mean the financials are good. ‘Cause remember, these
stocks can move inversely to what the earnings statements are because of the fact that
often it’s a by the rumor, sell the news type situation. So, even if a stock makes money, a company makes money, it
might not of made as much money as the market suspected. So, if this is a company
that’s been trending up for days or weeks or even months and everyone expects a bigger number, a bigger sales number, a bigger revenue number, even if they’re profitable,
if that number doesn’t meet market expectations the
stock can drop rapidly. We’ve seen this many times with a huge company like Apple. Look up earnings dates
in your StocksToTrade and look what Apple does post earnings. Quite frequently they can
make billions of dollars but the stock goes down. Sometimes they announce record sales and the stock price goes down. That’s because the market
expectations weren’t met. So, we wanna focus on the
stocks that are moving up, moving big in relation to earnings. That’s what we call an earnings winner and this is the thing
you need to focus on. That stock could be losing money. It could be, you could
look at the earnings report and see a stock that has declining sales, declining revenues, bad, bad red flags all
over the earnings report, but it spikes. Remember what I said a few minutes ago. The inverse can be true if the
market expected this company to lose even more money, if they expected it to lose $1 billion and they only lost, only, $200 million, then that is very often
a very bullish indicator because they lost $800 million less than the market expected. So, when you’re screening for those stocks this is something I do every
day during earning season, remember earning season
happens four times a year, I’m screening for stocks
with earnings, obviously, stocks that have more than 50,000 shares traded in pre-market, and are
up more than 5% on the day. Three simple criteria then
you can break down by price. I like to look at earnings
winners under $20, but this now gives you a
stock that has the earnings, has the volume, and has
the big move, 5% or more. Then from there you don’t even necessarily need to break down that earnings that much ’cause the market is telling you that this stock is an earnings winner. So, I want you to focus on
stocks that are moving big. Don’t fall in love with
the earnings statement. They can bury a lot of
information in there and you can often end
up with a losing trade simply because you focus
on the fundamentals. You can say, “well wait,
sales are up, profits are up, “this stock has to go up.” It doesn’t have to go up, only price pays. Write that down, stick
it on your sticky note on your monitor. None of the news matters, none of the earnings matters, only price pays. Focus on those stocks that
are moving big, high volume, big moves to the upside
on earnings with volume and those are the real earnings winners. (cheerful music)
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