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Thursday, December 28, 2006

Talking about Watchlists, man

I have gotten a lot of emails and comments lately regarding watchlists. The most common questions/concerns/gripes are:

1.) Stocks you trade don't show up on my watchlist.
2.) My watchlist is way too big - how do I manage it?

First, you should not be concerned that stocks I show on the blog are not on your watchlist. In fact, I have said before that as a reader you should want to see different stocks on my blog than those you traded - it gives you more variety and different charts to study.

I have detailed how I prepare my watchlist - I did it not so you would copy it, but for you to use as a point of reference. You should build your own watchlist based on what works best for you - maybe you prefer stocks that gap up/down by a certain percentage. Maybe you like stocks that only trade a certain volume. Find what works best for you, and run with it.

Second, you have to build a watchlist that you can manage. You can easily have a watchlist that numbers several hundred stocks everyday - but, what good would that do you? Personally I have trouble scrolling through 30 stocks trying to find set-ups, much less 150-200. If you have a watchlist that is too big, you will lose focus. You will chase set-ups. And you will give away your money.

So how do you "shorten" (or prioritize) your watchlist? There are numerous ways - I do so by volume. It continuously updates so I am always focusing on the top volume stocks. And if I have more time on any given day, I can go deeper into my watchlist.

Here are a few other ideas - only look at Nasdaq stocks. That will cut out 30-50% of your watchlist on any given day. Only look at gaps above (below) the previous day's high (low). Only look at gaps that have noticeable "white space" between the previous day's close and today's open. There are any number of ways you can shorten your watchlist.

Regardless of how you choose to build and prioritize your watchlist, you have to overcome the fear of "I might miss something". I have written about this before...we all miss great set-ups everyday; there is nothing we can do about it.

You need to create YOUR universe and live in it (build YOUR watchlist and focus on it).

As I have said in the past, the day I look back at charts and DO NOT find set-ups I missed will be the day I start worrying about opportunity "drying up".

Now is probably a good time to remind everyone - especially new readers - to visit "WELCOME, LINKS TO KEY POSTS, RESOURCES". You will find all of this and more covered in detail...

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estocastica said...

Great post.

Zoomie said...

Trader X, I am not sure you see my concern. What if I DO miss something?


Richard said...

As always, great advice.

TradingGoddess said...


Thank you for pointing me in the right direction.

I definitely believe that deserves a "Good Karma" donation!

I appreciate your wisdom, graybeard. hehehe


em said...

this post and the 'chasing success' should be reviewed each and every day. I used to change my scanner settings to make sure I didn't 'miss' any stocks. But what happened is my watchlist grew too large and it took me out of my 'routine'. I have a watchlist that sometimes doesn't contain the trades on your blog or others... but that's just fine with me. So long as I still get opportunities and find good setups... I don't need to see everything.

Happy New Year!!!

KayakHandy said...

This has nothing to do with this post but has to do with AAPL.

It's Friday at 12:00 noon central time and I think AAPL is about to make a break one way or the other very soon...I am leaning towards the upside of $85.92 but will take profit at 85.75. or get ready to sell for the long weekend if it goes south.

Unlike X style trades AAPL provided a $1.00 upside already this morning.

KayakHandy said...

well that AAPL was a bust" 'but the NEW YEAR will be great!

Happy New Year EveryOne!!!!