Your trading style and the stocks personality

Similar to people every stock has a different personality. Knowing the stocks personality and matching it with your trading style is something that can help you succeed.

It is a fact that every trader trades differently in one way or another. Even if two traders have very similar systems they will each have slightly different entry and exit rules because everyone’s personality is slightly different.

What most people fail to take into consideration is that every stock is slightly different as well. Some stocks may work very well with your trading strategy working like a charm. Others may not work so well. In fact some stocks might continuously stop you out too early, or pull back before hitting your price target.

Other stocks might move way too slow (or too fast) for your preference. If you are the aggressive swing trader looking to make a quick 10% on a trade don’t buy a 10 year bond that goes up an average of 4% a year. Similarly if you are looking for a stock that is going to move up consistently while being relatively safe don’t trade the fast moving stocks that double when the markets are good and get cut in half when they are go down.

It is extremely important to trade stocks that will allow you to trade your trading style. So, every time you place a trade it can be beneficial to look back at the past.

You can look at the recent past to see how you would have done if you entered at different buy signals. Try to be realistic. If the stock is trading at $200 don’t say you would have bought it two years ago when it was at $20 and hold onto it if that is not what you would have done.

Look for signals where you would have said, that gave you a buy or sell signal. And see how it would have performed considering your stop, target, and anything else you use. If a stock went up 300% last year with great fundamentals and just gave you a buy signal, but the stock is volatile and would have ended up stopping you out with a loss every single time in the past, maybe you should look for another candidate. The stocks personality is a big factor.

Taking a quick scan of how the stock performed in the past can put you ahead of 99% of the traders out there.

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