How Earning Reports Can Help You Trade

Earnings reports are huge. Like what I have said on twitter, the make or break of a stock can depend on it's earnings sometimes. Trading through companies earnings report can help you become a successful trader once you master it. First of all you might want to know some background on what earning reports actually are.
            Earning reports are basically report cards for companies after each quarter of the year. Usually, the quarterly reports are in January, April, July, and October, although it varies between companies. The report card analyzes net income, EPS, (earnings per share) earnings for continuing operations, and net sales. Then investors can gauge whether or not they should invest in the company based on the health of the earnings reports.
            Now, the analysts that estimate the earnings for each company, are very smart. But, don't be fooled. Their estimates are not always right. This can help you make a profit. The risky way to make big investments is to go invest on the earning reports. What this can do is if the company beats its earnings that the analysts predicted the stock can go up in big percentage points. The risk to it is, their is always the down side, and the down side is just as big if it does not make it earnings. The company can either beat its earnings and go up, or meet its earnings, then the stock can go based on the markets or basically stay even, or the company can miss its earnings and go down.
          So this way is very risky. But, with a lot of research you will get the hang of how analysts predict the earnings. Once you pick certain stocks study their earning reports inside and out. Get to know the stock as much as possible through its earning reports. Once you get to know the company very well, you can start different strategies to see if the company really will beat or not beat its earnings. You can take surveys of people to see if they buy the product or use the service and see if they mention the name of your company and how often they shop there. The more people you get obviously the better. You have to avoid insider trading as much as possible since its illegal, but know the basis of your company. For example, since I am a teenager their are certain companies that go after teenagers and try their best to get the teenage market to buy their products. I also have the common sense to realize that teenagers are trendy. So things don't tend to stay in very long. For instance Pandora was a hip new app that many young adults used to get music. Although my friends still use it, many people have been getting away from it. It was a hit sure but it didn't seem to stay in the hype for as long as people thought. It when in and out and was popularly used in conversation, but once they mention a new one like Spotify then you realize its competitor is gaining ground in popularity.
       It ended up that Pandora was down over 17% and recorded another quarter of negative income. Obviously that's not good. Even if people have not heard Spotify yet, it has been gaining ground in an already tough sector. Using this knowledge before the earnings come out on certain companies can help you make money. Whether it be shorting a stock or buying it, earnings can lead to a successful portfolio for short term investors. Although, it is incredibly time consuming, tricky, and if you predict wrong, your money goes a long way the wrong way.