Smart Money Secret I learned from my Prop Desk friend – Part1

Have you ever noticed how stock prices sometimes start moving before any big news actually hits the market? Maybe a rally starts a week before earnings, or a sudden surge happens ahead of an expected announcement. What you’re seeing isn’t magic—it’s the footprint of smart money.

Retail traders often wait for the headlines. They react after the news is out. Smart money—like institutional investors, prop desk traders, and large funds—anticipates. They position themselves ahead of the curve. And one of the clearest examples of this is how they trade around corporate earnings results.

This post kicks off a 3-part series on a corporate results trading strategy I learned from a friend who works on the trading desk at a large global bank. In this first part, we’ll look at what happens before the results are even announced—a high-probability setup that retail traders almost always overlook.

📊 The Strategy: Pre-Results Event Trading

Institutional desks don’t wait for the press release—they start accumulating their positions 10–15 days before the earnings announcement, once they sense that results are likely to be good. By the time the retail crowd starts buying after the results are out, smart money is already booking profits and getting out.

Here’s how this “Earnings Drift” strategy works, step by step:.

✅ Step-by-Step Rules

1. Identify Upcoming Results (10 Days in Advance)

Start by reviewing the earnings calendar 10–12 days ahead. You can use platforms like:

• NSE/BSE corporate announcements page
• Sensibull
• Moneycontrol
• TradingView’s Earnings tab

2. Assess the Expectations

Before you take any position, gauge the market’s mood toward the upcoming results:

• Search the stock name along with “results expectations” on YouTube.
• Focus on insights from channels like BloombergQuint, CNBC-TV18, and ET Now.
• Look for analyst panel discussions where the majority sentiment is positive (e.g., “expected to beat estimates”, “strong revenue growth likely”, etc.)

⚠️ If the sentiment is mixed or negative, skip the trade. This setup only works when there is consensus that good results are expected.

3. Check the Price Action

The stock should have gone through a recent correction—meaning it must have pulled back in the days/weeks leading up to this 10-day mark.

• Ideally, you’re looking for a healthy dip that might make the stock more attractive for accumulation.
• This acts as a setup: Smart money buys the dip in anticipation of good news.

4. Enter the Trade (10 Days Before)

If both sentiment and price action confirm the setup, buy the stock roughly 10 days before the expected results date.

5. Exit Before the Hype Hits

This is crucial.

• Sell the stock a day before the results or
• Exit before 12 noon on the day of the announcement (most companies release results post-lunch)

Once the results are out, price behavior becomes erratic and news-dependent. You’re no longer in control—avoid holding through the actual announcement.

🎯 Why This Works: The Psychology of Retail vs. Smart Money

Retail traders often get caught in the excitement after a good earnings report hits the market. They buy into the stock when it’s already rallied 10–15%—thinking it will keep going.

But what they don’t realize is that institutional players are likely exiting their positions at that very moment, locking in their profits. The post-result phase often sees a “sell-the-news” effect, where prices dip even after strong numbers are declared.

This divergence in behavior is what separates seasoned traders from the crowd.

Lesson: Don’t chase the headline. Anticipate the move.

🚫 Stocks to Avoid

Not all stocks are suited for this strategy. In fact, avoiding certain categories can significantly improve your win rate.

❌ Public Sector Undertakings (PSUs)

Government-owned entities are not performance-driven in the traditional sense. Their price action is often dictated by:

• Regulatory changes
• Government policies
• Budget allocations or disinvestments

Hence, this earnings-based strategy is not effective for PSU stocks.

❌ Commodity-Linked Stocks

Commodity sector stocks (like metal, oil & gas, etc.) are heavily influenced by global price trends. Even if results are good, macro factors like crude prices or global demand can overshadow them. Skip these too.

⚠️ Golden Rule: Never Hold Through Results

Even if the stock keeps going up post-announcement, resist the urge to hold.

• You have no control once the news is out.
• The market has already priced in the “good news.”
• Even a minor miss in expectations can trigger a sharp fall.

Stick to the system: Buy early, sell before the news.

Whether you’re a trader, investor, or market analyst, this dashboard is a powerful addition to your toolkit.

🔚 Wrapping Up: Trade Like the Pros

This pre-result strategy is a textbook example of how anticipation beats reaction in the markets. It’s how the smart money operates—quietly positioning ahead of time, letting the retail crowd fuel the final move, and then exiting gracefully before volatility takes over.

As a retail trader, the edge lies in understanding these patterns and playing alongside the big players—not chasing them.

Stay tuned for the next part in this series, where we’ll explore how to trade after the results, and another variation involving intraday plays around earnings volatility.

Watch this space!

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Disclaimer: The information provided in this article is for educational and informational purposes only and should not be construed as financial, investment, or legal advice. The content is based on publicly available information and personal opinions and may not be suitable for all investors. Investing involves risks, including the loss of principal. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. The author and website assume no liability for any financial losses or decisions made based on the information presented.