Pass on News Jumps and Earnings

Tip 6: Pass on News Jumps and Earnings

Both news jumps and earnings can be unpredictable and volatile, so avoid trading in either situation.

Sometimes, stocks quickly move 2%+ when reacting to "breaking news."

Don't act on these immediately; pass or let it settle before entering. These orders are typically from high-frequency trading bots that buy and sell within seconds.

The way the stock price reacts to earnings is unpredictable. Sometimes, stocks beat earnings and dip or miss earnings but rocket upwards. That’s because it’s challenging to understand what information and predictions about earnings are already priced into the stock.

And that’s why we recommend not trading through earnings. You can always sell for the earning announcement and then buy back in. Don't get attached and trade with emotion.