Trading discipline.  Now begins the high drama of earnings season.

Controlling emotions and maintaining a trading discipline during earnings season challenges all traders.  Over the next couple weeks prepare of an earnings barrage.  CNBC will be pulling out it’s most dramatic bumper music, and the talking heads will be issuing predictions left and right.  How can an average retail trader cope with this tsunami of data?

Have a plan and be disciplined enough to stick to the rules.  Personally, I turn off the news and avoid the talking heads like the plague.  I am responsible for my trading.  No one cares about my money more than me.  Consequently, I must stay focused on my plan and my rules!  For me, that means digging into the charts and studying price action.  Chasing big wins requires the willingness to take big losses if you’re wrong.  I don’t know about you, but that is not part of my plan!  The truth lies in the price action; everything else is just noise that can bias your decision process.

On the Calendar

The hump day Economic Calendar is a quiet one.  The Petroleum Status at 10:30 AM Eastern is the only number of consequence today.  The last reading showed a decline in supplies and as a result helped the overall market by lifting some of the big oil companies.  Another declining report today could give us a little hope that a trend is developing.  Perhaps, we could look to energy stocks for some tasty gains in the near future!  The Earnings Calendar continues to Ramp with 299 companies reporting today.  Stay sharp because some the media darlings will start reporting and they will affect the overall market.

Action Plan

I have been a net seller into this sharp rally taking some very nice gains.  I’m now very light on risk in my account as I’m expecting the market to pullback or at a minimum consolidate the recent move.  At least that is my plan, but earnings could easily toss a big monkey wrench into that plan.  Clearly, earnings are unpredictable.  As traders, the best we can do is stay focused on price action clues while maintaining our discipline to avoid getting caught up in the drama.  I’m confident we will be entering several new stock or options positions over the next few days.  Please keep in mind that during earnings season trades can move very fast.  Stick to your low-risk entry rules and avoid chasing.

Trade Wisely,

Doug