I want to attach an avatar to the trades and stocks you’re watching. Once you start looking at the stock a little differently, you’ll notice a pattern in the way they move.
Each stock has its own personality…
We typically use the avatar example in a business context. If I’m looking to discuss business with you (marketing, for example) to create a sales funnel for your customers, we’ll typically say, “Let’s create an avatar.”
An avatar is a fake person that targets the market you are going after. The same concept applies to stocks as well.
Every stock trades differently. Different people trade different stocks…
For example, the people who are trading McDonald’s stocks are different than people trading Apple stocks. If you create a certain avatar for each stock or company, you’ll start seeing subtle differences.
If you go out and look at all the people on the street, you’ll notice they all do look like people. But as you zone in on their characteristics, you’ll notice differences (hair color, eye color, hair length, etc.). Their personalities may also be very different!
The same thing happens in a stock. The McDonald’s stock may not move as quickly as a Priceline or Google stock. They each have their own pace and rhythm.
As you identify these differences, you’ll start seeing the patterns you can capitalize on…
Start looking and create an avatar for each stock you’re watching. You’ll start to notice that you’re always looking at the same companies time and time again.
If you’ve followed me for a while, I repeatedly list the same 20-50 stocks that I’m watching.
You can attach a picture, logo, or another symbol to give the stock its own personality. You can make the attached piece go in tune with the stock: volatile, stable, etc.
As you get more familiar with stock personalities, you’ll be able to capitalize on their rhythms. Once you get familiar with their price movements and price actions, you’ll see how they behave after earnings, before earnings, after news, etc.
Stocks are somewhat like a group of people acting and reacting to outside factors.