One report day can rewrite your month

You journal earnings trades by flagging every day you traded around a report. Then you review those days apart from the rest. It takes a line or two in the daily entry and ten minutes at month end.

A report day means any day you held a position through a report. It also covers trading the stock the session after. Trading a ticker on its report morning counts too, even if you meant it as an ordinary trade.

The daily entry is where the flag lives. Start it with the word EARNINGS and the ticker, so it's easy to find later. Then write what you did and whether you'd decided it before the open.

At month end, total the report days and the ordinary days on their own. Compare the two. After a season of data, pick one rule for report days. Keep it until the next season ends.

Report days don't behave like normal days. A stock can gap far past every level on your chart overnight. Option buyers also face the drop in implied volatility after the news. That can shrink a contract's price even when the stock moves your way.

The result is outliers. One report-day trade can set your best day of the month, or your worst. It can double your average winner or loser. It can account for most of your max drawdown.

That bends every number you use to judge your trading. Win rate, profit factor and expectancy all blend two different activities. One is your daily process at known levels. The other is closer to a bet on a single event.

If report days were the big winners, your normal trading might be losing money underneath. If they were the losers, you might drop a process that works. Either way, you're judging the wrong thing.

Keep it short. These are the lines worth writing, each one a single action.

Write EARNINGS and the ticker at the top. Note whether the report came before the open or after the close. Record whether you held through it or traded only after it. Write your size compared with a normal trade, such as half or double.

Note whether the trade was decided before the open or made up during the session. Write the level you used for the entry and the exit. Record the day's result for the earnings trades alone, apart from the day's other trades. Note how many trades you took on that ticker.

Write one sentence on what you'd repeat. Write one sentence on what you'd change. That's ten lines at most, and most days you'll need fewer.

Here's how the comparison works with made-up round numbers. Say you took 64 trades in a month and finished up 1,560. Expectancy, the average result per trade, is 1,560 divided by 64, or about 24.

Four of those days were report days, with 12 trades that lost 940 in total. That's an average of minus 78 per trade.

Take them out and you have 52 ordinary trades that made 2,500. Expectancy on those is 2,500 divided by 52, about 48. Your everyday process earned twice what the headline number said.

Now flip it. Suppose the report days had made 940 instead. Then the month totals 3,440 and the ordinary trades still made 2,500. The headline looks better, but a big part of it came from a few events. That's a weaker footing for the next month.

Run this split every month. After three months, you'll start to see which side is paying.

After a season of split numbers, write one rule for report days. Only one, so you can tell whether it worked.

Pick it from what the numbers showed. If report days lost money, the rule might be no positions held through a report. If they made money with wild swings, it might be half size on report days. Or, if the morning after hurt you, the rule might be sitting that ticker out until a level forms.

Write the rule at the top of your journal for that season. Keep the split running. At the end of the season, compare the report days under the new rule with the season before.

Then decide whether it stays. Change one thing per season. If you change three things at once, you won't know which one helped.