I just reread the blog on making successful trades, and I had a few other ideas for you. Some of these will be by the way of market maxims, others observations I've made recently and over the years.
1) There is an old market saying that is as true today as it ever has been. It is this: "Buy on rumors, sell on fact (news). There are many things that drive a stock, the most common being earnings---or better said, the "anticipation of earnings," both good or bad. See #3.
2) One observation is how the stock moves into an earnings announcement. Remember, just before the announcement, the company is in a "quiet period," or what I call the "red-light" period. This simply means no news---at least, no news from the company. Pundits, analysts, and other news reporters, are free to say whatever they want. So I watch and learn, trying to connect the dots, and then I share that info with you.
I can't prove these exact numbers, but it seems to me that about 80% to 90% of the time that a company makes an earnings announcement---whether it was going up, staying flat, or going down, into the announcement, the stock will back off and go down because the news is out. The rumors were true or not. The stock usually goes down. Sometimes not by a lot, but if you're playing options, and the earnings are near an expiration date, it could be disastrous for your option trade---because they are so time sensitive.
Also, much of the time, it's not about the actual numbers, but the commentary about the numbers. This is where the company makes "guidance" remarks about their future earnings, etc. One of the et ceteras is very important, and that is if the company makes other good announcements at the same time---like, a new dividend, or an increase in the dividend; a stock split or a share buyback; or maybe expansion plans, or the resolution of a lawsuit. This is why it is so important to read the whole news article, and seek info from many sources. I like briefing.com. YahooFinance.com is also very good. There are others.
I try to bring you info, but my comments are limited to the stocks that are currently in the basket of student trades.
3) In the stock market, news is everything. Nothing happens without the news. But as I stated in #2, the commentary about the news is also important. News goes into and out of the red-light, green-light period. The timing is set. However, there is one thing you can do: Figure out when the board of directors meets. Nothing happens until they meet. Yes, it could be by phone, but the list I made above are board decisions. You can call the company and ask them. Ask for the share-holder relations department. They will tell you when the next shareholder meeting is, but that's not what you want. You want: "When is the next board of directors meeting?" You still won't know what they will say or do, but know this: Nothing happens until they do.
4) Rick Santelli (The father of the Tea Party Movement) said this is reference to ongoing news: " . . . good news, but not nearly as good news as the headline shock value." There's a lot to this. Think hard on these words.
5) Last, I want to remind you to not get involved in a trade until you are ready. You should paper-trade extensively. Then when you are so excited---meaning the stars are aligned---that you can't wait, then go ahead (under the direction of your broker). Keep in mind the saying from my books: "I'd rather want what I don't have, then have what I don't want."
H A P P Y I N V E S T I N G ! Thought for the day: "If there's a way, take it; if not, make it."
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