Days to Next Earnings: Why the Earnings Date Matters for Stops and New Buys
The number of days until the company next reports results. Prices often gap on the report, straight past a stop-loss.
Contents (5 sections)
Days to next earnings is the number of days until a company is next scheduled to report its results. It matters for one reason: the report is the most likely day in a quarter for the price to jump, up or down, by more than any stop was built for.
Why the date matters
On an ordinary day a stock moves by about its average range and a stop-loss a few percent away does its job. An earnings report is different in two ways:
- The move happens between sessions. Results usually come out after the close or before the open. The stock's next trade is at the new price. There is no chance to sell on the way.
- The move is large. A move of 5 to 15 percent on a report is routine for many stocks, several times their normal daily range.
Put together, a stop at 8 percent below cost does not limit the loss to 8 percent when the stock opens 14 percent lower. The stop is found already passed. This is called gap risk, and it is the reason the date is worth knowing.
How rules use it
| Rule | What it does |
|---|---|
| No new buys within a few days of a report | Avoids opening a position whose first event is a coin toss |
| Reduce a holding before a report | Keeps the position, with less at stake on the gap |
| Sell before a report and reconsider after | Gives up the upside of a good report to avoid the downside of a bad one |
| Hold through, with size set for the gap | Accepts the risk deliberately, at a size where a 15 percent gap is affordable |
None of these is correct in general. What differs is whether the choice was made in advance or on the day.
What it does not tell you
- Which way the stock will move. A good report can be followed by a fall, when the market expected better.
- A confirmed date, always. Companies announce report dates a few weeks ahead and sometimes change them. Before the announcement, the date is an estimate from past reports.
In Stock Compass
The rule indicator is days_to_next_earnings, under Fundamentals: the number of days until the next scheduled report. A buy rule can require it to be greater than 5, so that no position is opened just before a report; an exit or trim rule can use a small value to act ahead of one. The watchlist marks a stock whose report is within five days ("Earnings in N days").
The count depends on the earnings calendar. Where the calendar has no date for a stock, the indicator has no value and a condition on it is not met. In a backtest, on days the calendar has no date for, a buy rule skips this condition and checks the rest; the result says when it could not be evaluated. Hold through earnings or sell? sets out the choice with worked examples.
FAQ
Should I sell before earnings?
That depends on the plan, and there is no general answer. Selling removes the chance of a gap against you and the chance of one in your favour. Many traders decide by rule in advance, for example reducing the position, so the choice is not made under pressure on the day.
Why did my stop-loss not protect me on earnings day?
Because the price moved while the market was closed. The stock opened below your stop level, so the first price at which it could be sold was already lower. A stop limits losses from gradual moves, not from gaps.
How accurate is the earnings date?
It is the company's scheduled date where one has been announced, and an estimate before that. Dates can move. Check the company's own announcement before acting on a date that matters to you.
Definition only — not investment advice.