Oftentimes when I have picked up a few shares in afterhours, I have lived to regret it the very next day. However, I do see an afterhours trade here. Today, everyone is so skiddish and fearful that securities tend to sell off very quickly in afterhours. There is a very predictable bottom in the afterhours chart, however, that I have seen many times before. The bottom is very noticable and good for a quick afterhours trade. Lets take an example following the AMD chart. Notice how AMD went down to near 21 dollars and stayed there for about 5 minutes. If you had gotten in at 21.03, you could have sold it at 21.23, for a quick 1%. If I were to attempt this strategy, I would indeed feel nervous to hold it into the regular trading hours not knowing what would happen next. I think the best way might be to find a bottom during regular trading hours versus fishing in afterhours. Tell me your opinion. Should I leave my "DO NOT TRADE IN AFTERHOURS" sign up?
aapl and ebay were very tradable. smooth, no too big of a spread and sorta predictable. i luv ah reports tradin', lookin' fww for next releases.
Forget AH, if they would just get rid of these 6.5 hour trading day things would go smoother. I wish they would at least expand the trading day to 8 hours.
A very dear friend of mine works aprox. 2 hours a day, when there are interesting afterhours earnings play. He never trades during regular market hours and never places a "bet" before the company has reported. He closes his position before the end of the day. Basically, he is a daytrader of the AH. He says playing earnings during AH have two phases. 1) Report 2) Conference Call Ive seen him in action, he is a beast. Basically he scalps using large positions. However, we all know how volatile the afterhours are during an earnings play. For example, today he was scalping AMD, the very same example the OP posted. He grabbed it at 21, called it AH support, if there is such thing. Ended up selling it at 22 minutes later once the CC had given it some life. He made a quick 2k in no time. His success rate fat exceeds his losing days and never works more than 1-2 hours a day. Pays no attention to overall news or indexes but does listen to the conference call like a detective. Hope this helps. He uses Etrade, I keep telling him there must be something better for Afterhours than that piece of crap broker. Oh well, if anyone here can add some input on an afterhours trading broker that rocks, please let me know. Have a good one.
That AH play is not as easy as it looks. I have sat and watched many, many, many, companies trade in AH, its not easy. A stock could easily jump on the first headline of earnings and it could easily drop 5% on the CC. Sometimes the earnings will look good and the conference call will sound great yet the stock could be trading off 8%. For someone to be that successful in AH is hard to believe. He may grab a few good ones, but I doubt his wins out number his losses.
I think it would be a little more complicated then just that. First, you would need the list of companies that are reporting earnings for that day. This is easily obtainable. Its a long list however. Second, type all the symbols into a page like IB. Third, is the monitoring of the page of symbols during that day. IB also has a filter screen to filter out the biggest losers for the day. It quickly updates and shows the ones tanking. Now here is the tricky part. Playing the bounce. We can easily see here that the stock hit 21 dollars and then started its bounce up. Then it hit went down and hit 21 again. Then it bounced yet again and headed to its lowest spot, 20.75. Then it recovered to 22.00. So at what point would you buy and sell. Lets say you bought at 21 on the initial bounce. Quite honestly, I would have probably started selling it at 21.25 and then not have had the balls to get back in.
Here is another good one, Motorola. It appears 22.75 was the entry area and then it recovered to 23 later on. If it was held over night, then it would have gone to 23.5 the next day.
The charts come from IB. Go to File at the top and then click on "save image". Here is the day after the big drop for AMD. When the market opened, the stock took a sudden dump in good volume from 22 to 21.4. There was then a recovery and then another good selloff to 21. So I guess if you trade in afterhours, you should keep the trade in afterhours. Meaning attempt entry and exit during afterhours.