The Earnings Dip and the Rebound: What Research Says About Modern Stop-Loss Placement
📉 The Earnings Dip and the Rebound: Why the Old 7% Stop-Loss Rule No Longer Works Every trader has felt it — the frustration of seeing a stock collapse right after earnings, trigger your stop-loss, and then skyrocket days later. The truth is, most companies release earnings after the market close , not before the open. Those few minutes after the report drops can cause wild swings in the after-hours session and at the next day’s open. This summer I learned that the hard way with AppLovin (APP) . On August 6 2025 , APP closed at $390.57 just before its earnings release. Expecting volatility but not disaster, I placed a stop-limit order at about $362 — roughly 7% below the close , following the textbook rule. After earnings, APP initially dropped sharply, my stop was triggered, and my shares were sold for $362 . But within only five days , by August 11 , the stock had rebounded to $475 — a gain of more than 20% from my exit price. That single trade confirmed ...