Creating a Watchlist

I have said this before but the first step in creating a watchlist is to have a stock screener - reason? Too many stocks about 13,000 or so of which about 2500 are optionable to know which is the best you need a way to sort them.

So how do we sort out the best optionable stocks? With a screener.

And another important question is why create a watchlist anyway? Because just because you have a good stock to trade from a screener does not mean it is the right time to trade it. Each stock has its own characteristics and its own patterns daily, weekly, monthly and you need to “watch” the stock to discover those patterns and to choose the correct time to get into a trade.

So the first step is to pick a screener and then what criteria to use for a screener to pick the correct stocks.

Well let me say that it really does not matter exactly what criteria you use to pick stocks as much as it does to watch the stock to know how it trades. Watching the stock is much more important. So you could just choose what your stock broker recommends or what your neighbor recommends or what CNBC is recommending BUT do not follow the recommendation. Watch the stock first - get a feel for how it trades it may take a few weeks to get the feel for that individual stock. Do not get caught up in the hype, even if it gets away from you several things can happen that will allow you to trade 1. The stock will come back or 2. it will give you another signal or 3. another better trade will come along. Stick to watching the stocks. Even ones that you have placed through an intense fundamental analysis screener, still watch the stock for a few weeks to trade it. You will be much happier with a watchlist and checking the watchlist daily than just going on recommendations or a screener alone, you will be much more successful.

Screeners - tomorrow!

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