I'm sure most traders get tired of being told to be patient when the market or a specific stock is climbing day after day. Missing out on nice rallies can be extremely frustrating. But if there ever was a time when patience paid off big time it was over the past few weeks.
Before I share the results of some recent trade results with you I want to point out our formula at Earnings Beats, because it's simple. We scan for stocks that beat earnings expectations - top and bottom line - examine the market reaction to the earnings and then wait for pullbacks to strategic levels that could prove to be high reward to risk trades.
For example, VAR recently reported superb earnings, pulled back to an important technical level and became a trade alert for our members with an entry price of $116.40, a price target of $124.75 and a stop loss of any move below $114.85. This resulted in a 5 to1 reward to risk ratio which made it a good prospect. If the trade went against us we were looking at a loss of 1.3%. On the other hand if it went in our favor, which you can see below it has, a potential gain of over 7%.
We had other trades that panned out quite well when the market bottomed including IBM +7.2%, AXP +7% and SNAP +6.7% all achieved by being extremely patient, and all hitting our price targets within just a few days. We also had some stocks stop out recently but guess what? The average loss for those that went against us was in the range of 1 to 3% as our entry levels were all near key technical or price support levels with little tolerance for those that didn't work out, i.e., minimizing losses. And it's what has allowed us to consistently achieve high risk adjusted returns that handily beat the S&P.
Being patient becomes even more important in a highly volatile markets, like the one we've experienced lately, since things can turn against you quickly; i.e., the direction of a stock can shift fast. So you'll want to do everything you can to get the upper hand. In fact, I've decided to conduct a webinar this Monday (when the market is closed) where I will go over a number of stocks that recently reported earnings and beat expectations and will demonstrate, that with patience, were or could become high reward to risk trading candidates. I will also share with participants some of those recent trades that went against us and what happened to them after they hit our stop loss levels and when I do, you will see firsthand why honoring stops is such a critical part of the process. If you want one of the limited seats to this FREE webinar just click here.
I have found over many years of trading that being patient pays dividends. If you chase stocks that have already made substantial moves higher or enter positions that are in the middle of key support/resistance levels there's going to be a lot of frustration, and likely, a lot of losing trades. Guess what? There's no need to put yourself in harms way!
At your service,
John Hopkins
EarningsBeats
