Surviving Earnings Season as an Intraday Tradereric

This is the third special topic in the ASX order book series, after fat fingers and panic opens. It's about a recurring surprise in the journals I read: reporting season, the busiest stretch of news on the ASX calendar, was very often the hardest stretch of the year to trade.

The ASX reporting calendar

Most ASX companies have a June financial year, which produces two major reporting seasons:

Dozens, sometimes hundreds, of price-sensitive announcements can land on a single morning.

Why too much news hurts

You'd expect more catalysts to mean more opportunity. The journals told a different story, and the reasons were consistent:

Several traders described their earnings months as historically their worst, and named exactly these problems: too many tickers, gappy opens, and the fear of missing out. The traders whose earnings seasons improved over time didn't do it by trading more news. They did it by trading less of it.

A plan for reporting season

Here's the approach I distilled from the journals that handled it well.

Before the season

• Build the calendar. Know which companies report on which day, especially the ones you know well.
• Pre-select a short list. Stocks you understand, with enough liquidity, in sectors you trade. Ignore everything else, deliberately.
• Know the expectations. For your short list, know roughly what the market expects, and what would be a genuine surprise.

The night before or early morning

• Read the announcements for your short list only.
• Write a scenario plan for each. If it opens up big with a bid surplus, what do I do? If it opens up and sellers appear, what do I do? If it gaps down on one seller? Several journals described planning for multiple scenarios, even if most of them are only traded mentally.
• Grade the catalyst. Is this result genuinely material and unambiguous, or noisy? One useful tool is a simple catalyst grader: a scoring sheet for surprise size, quality and clarity, which then feeds your setup grade and your size.

At the open

• Size down. Gaps are larger and books thinner. Same risk in R, smaller position.
• Use the book, not the headline. Good news without bids underneath it is a trap. The opening auction rules apply with extra force.
• Consider waiting. For many traders, the first seconds of a results open are a lottery. Letting the opening chaos settle and trading the opening drive that follows can be better.
• One or two trades, done well. Not ten done badly.

After day one

• Second-day plays. Some of the best results trades aren't on the day of the announcement at all. A stock that sells off hard on a decent result, or rallies on a weak one, often gives a clearer setup the next day once the initial reaction has played out.
• Drift. Strong surprises can keep moving in the same direction for days as analysts update forecasts and funds reposition. That's a swing idea rather than a scalp.

Earnings for different trader shapes

The win rate vs payoff post described two profitable trader shapes. Earnings season affects them differently.

Quarterlies: the small cap version

The quarterly reporting weeks are a different beast. Hundreds of small caps, especially miners and explorers, release activity and cash flow reports in a short window. The volume of news is even higher, the liquidity lower and the announcements harder to interpret quickly.

The same principles apply: a short list of companies you already understand, a clear view of what matters in their report (cash burn, production, funding runway), and patience. A later special topic covers the red flags to look for in those quarterly cash flow reports.

The test

At the end of a reporting season, look at your journal and ask: how many trades did I take, how many were on my pre-selected list, and how did each group perform? If the off-list trades lost money, which is common, next season's plan writes itself.