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Earnings Announcement

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When a company declares its earnings, it typically has an affect on the price of its stock, not however, always in a predictable fashion. Earnings season is generally during the period after the ending of the quarter once companies publicize their most current earnings performance. Earnings announcements can have a remarkable impact on the company's stock prices. Usually, if a company's earnings surpass expectations the stock has excellent chances to go higher up. However, if it fulfills or even worse, misses the expectations then its stock price drops greatly. Thus among the most accepted stock market trading tips is not gamble too much during this time.

Earnings season is regarded as the most volatile time in the stock market. Investors and traders can understand if what they expected has been met by the companies, except or even missed by them. Each time earnings season approaches, earnings trading comes up. In fact, it is during this time that there are big changes, positive and negative and it is a common thing to witness a fifty to sixty dollar stock jump when companies announce their earnings.

A few traders try and forecast what would happen to a particular stock of a company when they declare their earnings. They think of it is a simple means to making huge profits in a short period on their money. It should be borne in mind that while this earnings trading can result in big earnings it is at the same time a very dangerous manner of trading.

It is very tricky to forecast in which manner stocks would move, or if it would move at all, during earnings and after earnings announcements. Being conservative during this time and not taking too much of a risk is the most correct decision. Sticking to trading stocks that are not any time soon declaring their earnings is a good option.

ETF's and indexes are also a good way of escaping volatility during the earnings period. Making use of stock market software and trading software can also make the task less cumbersome for traders and investors.

Thus, it is true that the earnings season brings forth for every investor new challenges. He can, however, trade in advance of earnings, which would mean buying shares when he expects a company to proclaim better than anticipated results, or after earnings, which would mean buying instantaneously to an earnings beat or even short shares of the stock that had missed earnings.

The best stock market trading tip during this period is to do your homework well in advance in terms of research and proper advice from experts in the market and to follow a certain discipline, which is sure to keep you associated with paramount opportunities and guard you from huge losses in this rather unpredictable market.



Source by William Kadutzi

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