In this short post, I’ll share three tried-and-true, battle-tested strategies that have generated triple-digit annual returns for me in the past. Any trader with basic technical analysis skills can immediately integrate these strategies into their trading repertoire and make money with little effort.
Pre-Market Range Breakout
This strategy begins with an earnings gap-up, meaning the open price on earnings day is higher than the previous day’s close. These typically generate some decent volume during the pre-market session, and in turn produce a sense of support and resistance we can use as a guide once the market opens. The key here is to buy the stock in the first 45 minutes of the trading day as momentum pushes it up over the pre-market high. Using $CDMO as an example, I’ve drawn a line at the top of the pre-market range and would use that as my entry point.
Post-Earnings Continuation Breakout
The post-earnings continuation breakout strategy is a basic support/resistance setup that I have used for both momentum-based day trading, and swing trading. The concept is pretty simple: locate stocks that are breaking out over their earnings-day high or earnings day resistance level, and buy them as momentum is picking up. This is a great strategy for part-timers because you don’t need to be glued to your computer. Just scan for these setups every night and set a price alert in your trading platform. Here is a visual representation, annotated with a few of my trade-signal indicators.
Post-Earnings Continuation Breakdown
This is the inverse of the previous strategy. Simply short the stock as it’s taking out earnings day support, and lock in your gains the same day or hold for larger profits. Because earnings is a catalyst for momentum, I like to short every time the stock consolidates and breaks down post-earnings. This strategy works best on stocks that have huge losses on earnings day so I tend to set my screens at “Earnings Day % Change From Open < -10”. Here’s an example: