Why Should You Track The Company Earnings?

Why Should You Track The Company Earnings?

The company schedules its corporate earnings in advance and the earnings are published in each quarter. As a trader, you should be watching these earning reports carefully to take a trade. The earning reports publish the performance of the company and the future growth and plans of the company are discussed.

The earnings seasons let one judge the health of the economy and this is why the reports get a lot of attention. The release lets the analysts review their view on the stock market.

Impact of the earning on the benchmark index

Most of the traders who trade in the futures market do not look at the performance of the individual stocks. However, they do keep a track of the earnings of the economy to get a fair idea of how the index may perform. The strength or the weakness of the earnings season is a major indicator that one looks at in order to take a long or a short position in the index.

It is also important to watch the components of the index. So if it is a manufacturing company that has not performed well then the manufacturing index would be impacted.

Volatility increase

The earning season is important for the futures traders because it lets them form an opinion about the index and the markets performance. This is the period when the market volatility will be huge. This is because during the earning season the analysts start to revise their view on many stocks based on how they have performed in the past quarter and what the company outlook is.

Should you trade the company earnings?

It is important to keep a close eye on the earnings of the company, especially the ones that interest you. However, before taking any new position in the market first wait for the news to settle down. Since the prices will be highly volatile before and just after the earning reports are published it is important to stay away from taking any fresh trades at this time. Once the panic settles you can go ahead and start to take a new position on the stock.

using stochastic to take a position

Stochastic is a momentum indicator that you can use to take a new position in the stock market. When the momentum drops below the 20 lines then this indicates a buy. Sell signals are generated when the momentum rises over the 80 lines. You can trade on the Bitcoin Code software using the momentum indicators and based on the companies earnings reports.