Why trading before an earnings report is a risky gamble
About this episode
I've seen too many traders try to trade something on a hunch because they thought earnings were going to be a blowout.
It's much more complicated than that.
There's the EPS, top-line growth, expenses, one-time charges, and forward-looking statements that get reported.
I've seen companies beat by $0.02 per share, but the forward-looking statements are bearish or cautious and the stock sells off.
Trading on hunches is a gamble: you don't know the probabilities nor the expected values.
If you can't model it, you can't trade it.
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