Written by A.J. Brown

The Secret Life of Stocks

Secret Life of StocksEvery stock leads a secret life, which is driven by its unique personality.

For instance, RIMM (the ticker for Research in Motion, the company that created the Blackberry) has long been popular among day traders because it’s so volatile.

The more price volatility a stock experiences in any given trading session, the more opportunities there are to make quick profits.

So stocks have “personalities.” And these personalities come about primarily because of the character traits of the people who are actively trading or investing in the stock.

Another example: Stocks for credit unions tend to be stable. That’s because the people buying these types of stocks are primarily interested in predictable quarterly dividends and not quick gains. Day traders don’t trade stocks like these.

When you trade, it’s important to know the personality of the stock you’re trading. Who is driving the price of the stock? What are those people like? How do they influence the stock price on a day-to-day or week-to-week basis?

I encourage traders to develop a list of stocks they watch on a daily basis. Over time, you’ll develop a feel for the stock and the secret life that it leads.

Once you’ve developed in-depth knowledge about your list of stocks, you’ll be able to trade with much more confidence that a person who is scanning hundreds of tickers a day.

Are you watching every stock that exists, hoping to spot a “winner”? If you are, stop it. It’s counterproductive.

Instead, zero in on a handful of stocks. Learn them inside and out. All the rest is noise.

Best regards always,

A.J. Brown

8 Responses to “The Secret Life of Stocks”

  1. Mark @ 12:37 pm:

    What ever happened to the trading challenge?

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  2. paulius @ 3:12 pm:

    I do agree with the idea.
    One of the stocks I keep watching is Apple. It is really interesting to see how the stock price reacts to the news on the company, as well as broad market analysis. Over time, you start to see patterns.

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  3. Endel Bendel @ 5:31 pm:

    You must present a theory of stock personality types or components for this idea to have substance.

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  4. LimaSierra @ 5:41 pm:

    That matches my experience!

    However, stock personalities can change over time, so one should keep an open mind too.

    Also, “one man’s meat is another man’s poison”. Some people would prefer to sit back and quietly collect a rich premium on the options of those less volatile stocks, instead of looking for “quick profits”, possibly accompanied by equally quick losses.

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  5. RichE @ 7:35 am:

    Hey A.J. what’s the title, “The Secret Life of Stocks” got to do with the article? I thought I was going to find out RIMM was cross-dressing. LOL.

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  6. A.J. Brown @ 8:26 am:

    Hi Mark.

    The trading challenge is still alive and well.

    The trading challenge was announced on Monday, March 10th at a Trading Trainer Money Link webinar and on April 22nd to the public. Seeing as how it is June 24th today, it’s been a little more than three months since the membership heard about the challenge and two months since the world heard about it.

    In case you didn’t know, I was in a very bad car accident on April 24th, two days after I announced the challenge publically. I’m lucky to be alive. I’m still recovering. I’ve been doing very little since the accident aside from focusing on healing.

    Thanks for the interest, Mark. I will post a new blog post on the subject in the next couple of days to give a more detailed explanation of what is up.

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  7. A.J. Brown @ 8:33 am:

    Hi Endel,

    In the learning materials I’ve published I talk about long-term trend-followers, short-term trend-followers and patterns that alter.

    Thanks for your response. Substance is key.

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  8. A.J. Brown @ 8:33 am:

    Hey RichE! Hillarious comment.

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