How to Make Money Trading the Reporting Season

How can share traders and stockmarket investors make money trading the reporting season? For companies listed on the Australian sharemarket, they must report their earnings, profits and losses to the market within two months of the end of half year and end of year financial periods. The reporting season results can vary, it can be highly predictable or may be very surprising. Of course, if you want to make some money from a trading season you need to keep your eyes peeled for any possible opportunities in the market via technical or fundamental analysis.

Most traders are a hybrid of both styles and you can take advantage of your knowledge and awareness of both disciplines to make money trading the reporting season. For example, if you were a trader you would look at any signs on the price chart with your indicators to see if there are any moves which confirm or deny any of your underlying fundamental reasoning. Then as a technical trader you would also believe that the market would generally price in movements leading to major announcements. (This doesn’t count any major surprises and this strategy must be used with caution and used together with risk management)

So if you plan to make money during the half yearly public company reporting season you must plan ahead, anticipate any moves and take a position before the announcement to maximise any profits from any ensuing rally which may eventuate. On the other hand, if you would like to increase your chances and reduce the risk of being on the wrong side and don’t mind forgoing some of the price movement, then you can wait until the announcement is made and then ride the following trending wave which sometimes eventuates if the financial reports are influential and differ a lot from market consensus.

Also, another perspective you must also consider is the macroeconomic environment which could influence the industry the company share price you are examining and considering in taking a position. For example, if your stock is a resources and materials company like BHP - their bottom line would be heavily influenced by commodity prices. If you were a company totally focused on one metal: such as Lihir - then it is wise to check the performance of the gold price amongst other things. Another aspect you may want to consider is the Aussie dollar and the currency hedging the company may undertake which may influence the company bottom line if they operate in multiple countries.