In short
Share positions are closed one trading day before any corporate event and the symbol goes close only. Index positions stay tradable through dividend events.
Tradin handles corporate events on shares differently from many brokers. Rather than adjusting your open position, it closes it before the event.
The policy, in full
This applies to all corporate events on shares: dividends, earnings announcements and stock splits.
- One trading day before the event. All open positions on the affected share are closed automatically at the market price at that time, all pending orders are removed, and the symbol switches to close only mode.
- After the event. The symbol returns to normal and full trading resumes at the new price.
You therefore never hold a position through the event. There are no share quantity or price adjustments to track: you simply re-enter at the adjusted price once trading resumes.
Why dividends move a price
When a company pays a dividend it hands out cash, so the share price usually falls by about the dividend amount on the ex dividend date. Own the share before that date and you receive the dividend; buy on or after it and you do not, but you may buy at a lower price. Closing positions before the event means no artificial profit or loss from that gap, and no dividend charges on short positions.
Why an index dips instead
Index positions remain tradable through dividend events. When several large companies in an index pay at once, all their prices fall slightly and the index value dips. That dip is an accounting adjustment, not a market decline.
| Index type | What it measures | Effect of a dividend |
|---|---|---|
| Price return index | Price changes only | The value falls, because payouts are not reinvested |
| Total return index | Price changes plus reinvested dividends | Dividends are assumed reinvested, so that growth is included |
Tradin index positions, and most public charts, follow the price return version. That is why the dip shows.
Stock splits
A split changes how many shares exist and what each one costs, without changing the total value. In a two for one split, 10 shares at 100 US dollars become 20 shares at 50, still worth 1,000 in total. In a one for five reverse split, 50 shares at 1 US dollar become 10 shares at 5, still worth 50.
| Action | Your share count | Price per share | Total value |
|---|---|---|---|
| Forward split | Goes up | Goes down | Unchanged |
| Reverse split | Goes down | Goes up | Unchanged |
Companies split forward to make the price affordable to more people, to make the share easier to trade, and sometimes to signal confidence. Reverse splits are usually done to meet an exchange's minimum price rule or to look more stable to larger investors.
Earnings season
Four times a year, listed companies report their quarterly results. Earnings announcements are among the most volatile scheduled events in the stock market, and a stock can move 5 to 10% or more when results differ from what analysts expected. Markets react to results against expectations, not to results alone, so good numbers do not guarantee a rise.
Most companies report outside trading hours, so a stock can gap dramatically at the next open, jumping straight past any stop loss you set. Closing positions the day before protects you from exactly that. Results from major companies can also move whole indices and sectors. Index positions stay tradable through earnings, but expect raised volatility.