Step 1 of 4
How earnings move a stock
Each quarter a listed company reports revenue, profit and, most importantly, its outlook. The share price moves on the difference between those numbers and what the market expected, not on whether they are good in absolute terms. A company can beat forecasts and still fall because the outlook disappoints.
You can estimate what a normal reaction looks like without any special tools: a daily chart shows the stock’s past earnings gaps. If it usually moves 5% on results, a 1% stop at the open is noise, not risk control.
Most US companies report before the market opens or after it closes. The first trades after the release often happen in a gap: the price opens far from the previous close, and the first minutes of the session are fast, with wider spreads.
Step 2 of 4
The MFC Stocks session
MFC Stocks trades in the regular US session: 09:30–16:00 New York time; new entries stop at 15:45 and positions close from 15:50. Because every position is closed before the evening, you are flat through every after-hours earnings release and every weekend. You never wake up to a gap against an open position.
You can place limit and stop entries at night or at the weekend; they trigger only in the session, and any entry still working when new entries stop is cancelled. With the Extended Hours add-on you can also trade pre-market and after-hours with limit orders. If a stock is halted, nothing in it fills until trading resumes, and a position you hold is valued at its last price.
Step 3 of 4
Sizing the post-earnings open
Use shares = risk in dollars ÷ stop in dollars per share.
Worked example: a $10,000 account risking 0.5% risks $50. On a normal day, a $120 stock with a $1 stop gives 50 shares. After earnings, the same stock might need a $2.50 stop to sit outside the opening noise, so the size drops to 20 shares. The dollar risk stays the same; only the share count changes.
Leverage on MFC Stocks is 1:2, so buying power also caps how much you can hold. Check the order ticket before you send. Watch volume as well: thinly traded names can jump through a stop after earnings, while liquid large caps usually fill closer to your price.
Step 4 of 4
The rules that matter on earnings days
- Daily pause. MFC Stocks pauses the day at a 2% loss, measured from the starting balance. On a $10,000 account that is $200. Two fast stop-outs on a gap open can reach it.
- Maximum loss. 5%, trailing on your highest closed balance until it locks at the starting balance.
- Best day. During the evaluation no single day may make more than 35% of your profit. One lucky earnings trade can make the rest of the evaluation harder.
A practical approach: trade earnings names at half your normal risk during the first week of earnings season, and keep a list of which names respect your stops.
Recap
- Earnings land outside the regular session, so the reaction shows up as a gap at the open.
- Shares = risk in dollars ÷ stop in dollars per share. Wide post-earnings stops mean fewer shares.
- One big earnings day can push your best-day share toward the evaluation cap.
Check yourself
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Lesson complete