Earnings season is an exciting time for us as traders. As Bella puts it, this is our Superbowl. Today was a great example of why this is an exciting time.
I love being on the bus on my way to work scanning through briefing on my phone and seeing that a few of stocks I trade well have reported and are up/down 5%+. Now that is a sign that it is going to be a good day. I am excited to get to work to make some money to pay for my next vacation!
I have to point out that it is during this time that it is very easy to get distracted with all the action in the market. It is very easy to try to be involved in all the stocks that look juicy. Obviously there is a lot of free money in all the stocks in play off earnings but as traders you have to keep your focus. It is better to trade 1 or 2 stocks at a time very well than trade 4-6 poorly. Personally, I find that when I spread myself too thin trying to get action on a lot of stocks I end up making okay money instead of killing it.
Today was a good day for me. I stuck to MRK since I traded it well yesterday afternoon and was familiar with how it traded. MRK treated me very well today. When MRK stopped moving, I moved to AXP and made a couple of big plays. I stopped trading AXP after it pulled some shady stuff off a big level. Then I moved to BJS because a lot of our guys were chirping it up and were making good money in it. But after a few hundo BJS got too tough for me so it was time to move on. Then WB got really in play and I traded that stock for the rest of the day. So you see I traded a lot more stocks than I usually do but always one at a time. My focus was always on one stock. Yes I did miss a lot of fun moves in some of these stocks. But I also caught most of the moves while I was trading them because I focused ENTIRELY on them.
The point of this entry is that you should always look at what is active for the day. Today there was a lot of good stuff. Our desk did very well off the top 5 stocks mentioned during our AM meeting (AXP, MRK, BJS, WB, AIG). However, you should always try to focus on one or two stocks at a time and know when the money is gone to move to the next one. Do not spread yourself too thin.