The reporting season brings opportunities for investors, but also risks. Those who are prepared can use price movements in a targeted manner.
• Reporting season provides important insights
• Observe estimates, results and outlook
• superior in advance of the trade strategy
Important insights for investors
In the reporting season, most of the listed companies publish their business figures. Although not all listed companies present their quarterly figures during this period, many large companies announce their results within this phase. Usually the reporting season begins a few weeks after completing the last month of a quarter, i.e. in January, April, July and October.
The reporting season is an important time for investors. It gives you insights into the recent results, but also forecasts for the future of companies and can help make decisions about stock investments. And so the number templates of companies are often associated with a volatility of the share price. Therefore, investors should consider a few things during this period.
Meet stock selection
Since it is almost impossible to keep an eye on all the number templates of all companies, it is advisable to take a closer look at a few concrete companies. These can be companies that are already in the portfolio or companies that investors would like to include in the portfolio. If investors have your list, you should find the dates for the number templates so that you do not miss an appointment. In addition to the companies that are actually of interest, investors should also keep an eye on the data of other leading companies from the same sector, as they can influence the entire industry.
Take a close look at the preliminary assessments
However, investors should not only look at the company report, but also the estimates that are published in advance, since the reaction on the stock market is not only based on the figures submitted, but also whether the expectations are failed, fulfilled or exceeded. For example, sales or profits can increase, but not to the extent that the share price falls – or sales or profits go back, but not as much as fears in advance, whereupon the share price increases.
Forecast at a glance
But not only what was achieved in the past quarter or financial year is important, but also the view of the company: Despite strong figures, falling courses can also reflect on the future development. In contrast, price gains can be waved despite the weaker than expected results if, for example, the company surprises positively with its outlook.
Volatility before the number template
In addition, it can happen that strong numbers are expected in advance and the share price can therefore grow before the report is published. The good news could then already be priced in and investors could decide to take their profits with them by selling the share certificates, which means that the share price falls. On the other hand, it may also be that a weak report is expected on the market, which is why the share gives up before the number template and then there may be a recovery.
In order to successfully navigate through the reporting season, according to IG.com, investors should cease in advance. This includes, for example, when and how positions should be opened and closed, which yield goals are sought, how much time should be spent on trading and how risks are handled. The management of the positions should follow a fixed scheme – both before and after the announcement of the business figures in order to avoid impulsive decisions and to act rationally instead. Anyone who defines rules for different scenarios in advance can react calmly to surprises.
Risk management is also an important element of preparation. For this purpose, for example, stop orders can be used, which automatically close a position if the course moves too strongly against the trade, or limit orders with which profits are secured when certain price targets are reached. In this way, losses can be limited and earned.
Editor finance.net
This text serves exclusively for information purposes and does not represent an investment recommendation. Finance.net GmbH excludes any regress entitlements.