Understanding share price reaction to company announcements

Ever wondered why the share price of a company falls after a seemingly positive announcement?

Why would the share price fall 5% when the company announced it has increased its net profit by 20%?

Although the share price reaction does not seem logical, there is a very good reason for it.

Frequently Asked Questions about the S&P/ASX 200 Index

• The S&P/ASX 200 measures the performance of the 200 largest stocks listed on the ASX.
• Representative, liquid and tradable, it is widely considered Australia’s pre-eminent benchmark index.
• The index is float-adjusted, covering approximately 80% of Australian equity market capitalization.
• Listed companies place immense significance on their membership in the S&P/ASX 200 index. Inclusion in the index generates significant institutional interest for constituents, and proliferates widespread media and buy/sell side analytical coverage.
• Also, most margin lenders and CFD providers also use the S&P/ASX 200 constituent list in determining which stocks are made available for their clients' trading. This adds to the interest and liquidity of the S&P/ASX 200 stocks.

Keys to Trading Success 

Ever wondered what it takes to succeed as a trader?

Hundreds of books and articles have been written about this topic, and they invariably boil down to these three points.

How to intelligently use analyst research reports

When a broker or research firm issues a Buy, Hold or Sell recommendation, should I act immediately?

Should I believe whatever they say?

What does a target price mean?

How do I make sense of and use the research information to make informed investment decisions?

What do I do if I receive contradictory recommendations or information from different brokers?

There are so many research reports to read. I am suffering from information overload. What do I do?

Maximising Your Entitlements

Part 5 of CPA Australia's 30 Ways to Build Your Wealth series explores ways to maximise your wealth through superannuation, insurance and tax benefits.

Becoming Financially Literate

Many Australians delay taking control of their finances because they don’t have the time, they find it too daunting or they may just not know where to start. The reality is though the sooner you take charge the sooner you can start working towards achieving better results, especially in the long term. Part 4 of CPA Australia's 30 Ways to Build Your Wealth series explores some of the important financial concepts.

Being Tax-Savvy

Part 3 of CPA Australia's 30 Ways to Build Your Wealth series highlights ways to minimise your tax and maximise your after-tax income.

Spending Money To Make Money

Part 2 of CPA Australia's 30 Ways to Build Your Wealth series provides helpful tips on how to make money by spending money.

Creating Good Money Habits

Many Australians delay taking control of their finances because they don’t have the time, they find it too daunting or they may just not know where to start. The reality is the sooner you take charge, the sooner your can start working towards achieving better results, especially in the long term.

Words of Investing Wisdoms

Stock Market Wizards is a collection of interviews of America's most successful stock traders. These traders generously share their investment insights, their wins and tribulations, and the humble background which most started from. An inspirational read for new and experienced investors and traders, this book summarises the insights derived from the interviews into 64 concise key points at the end of the book.

Successful Investing Using Probability

It is a vast oversimplification, but not an overstatement, to say that the stock market is an uncertain universe. In this universe are hundreds, even thousands of single forces that combine to set prices, all of which are constantly in motion, any one of which can have a drastic impact, and none of which is predictable to an absolute certainty.

The task for investors, then is to narrow the field, to identify and remove that which is the most unknown, and to focus on the least unknown. And that is an exercise in probability. Let's look at how Warren Buffett, the world's greatest investor, uses probability theory in his investing.

Investing Golden Rules - The Myths

Barbara Drury looks at investing's golden rules - and finds some of them are more like old wives' tales.

How Are Opening and Closing Share Prices Determined?

Ever stared at a real-time market depth screen at 10:00am or 4:05pm and wondered how are share prices determined at the beginning and end of each trading day? Is there a way to generate an advantage by observing how bids and offers move in the market depth during pre-open?

Conversations With Top Traders

Over an 18-month period, Gil Morales tallied a return of over 3200% in his personal account. Christian Kacher Ph.D amassed a mind-boggling return of over 70,000% over 4 1/2 year period. In their joint interview, these William O'Neil (founder of Investors Business Daily) disciples share with you the tools of their trade, what they consider their most profitable chart patterns, and when they decide to nail down profits in their funds.

Investing Guidelines

Thirteen tried-and-tested investing guidelines to help you succeed in investing.

The Secret To Accumulating Wealth

Success secrets of the ancients and the greatest inspirational work on the subject of thrift, financial planning, and personal wealth.

Evaluating Your Trading Performance

Evaluating your trading performance helps you fine-tune your trading strategy. The records maintained in your trading journal form the basis for your trading evaluation. From this, you can ascertain in a systematic and objective manner:

* How profitable you have been
* Your win/loss ratio
* Your average percentage win
* Your average percentage loss

No One Drifts To Success

You don't have to be a futurist or a fortune-teller to be able to predict someone's future. You can do so by asking him or her one simple question: "What is your one definite purpose in life - and what plans have you made to attain it?"

Phases of Investment Cycle

The ability to recognise phases of investment cycle and act accordingly increases your success as an investor. Fortunately, recognising these phases is not difficult if you know what to look out for.

25 Golden Rules to Beat The Street

Peter Lynch's "invest in what you know" strategy has made him a household name with investors both big and small. An important key to investing, Lynch says, is to remember that stocks are not lottery tickets. There's a company behind every stock and a reason companies -- and their stocks -- perform the way they do.

It's Managing The Losses That Makes You Profitable

Successful market participants are successful because they focus on, and manage, their losses. Whilst fixating on profits is an enjoyable past-time, it will do little more than make you feel good. A survey in the United States showed that 20% of people in the stock market succeeded in making money over the long term and this coincided with the fact that only 20% of the people used risk management techniques. It has also been proven, on more than one occasion, that risk management combined with random share selection can generate profits.

How To Profit From Downward Movements

Traders often remark that shares fall faster than they rise, noting that announcements of failed deals or poor earnings seem to drive stocks down even more than a good report will cause it rise.

Evaluating Risk/Reward Ratio

Share Trading: 15 Rules To Live By

The Ins and Outs of Trading Stocks

Making lots of money is the obvious goal of most people who decide to enter the world of trading. How successful you become as a trader depends on how well you use the tools, gather the needed information, and interpret what you've got. You need to develop the discipline to apply all that you know about trading toward developing a winning trading strategy.

Discovering how to avoid getting caught up in the emotional aspects of trading - the highs of a win and the lows of a loss - is key to developing a profitable trading style. Trading is a business and needs to be approached with the same logic you'd apply in your approach to any other business decision. Setting goals, researching your options, planning and implementing your strategies, and assessing your success are just as important for trading as they are for any other business venture.

Condition Codes

Ever wondered why some trades are classified with particular codes (such as XT, SP) in the Course of Sale information? Find out what they mean.