How To Make a STRONG & ACTIONABLE Trading Watchlist

How To Make a Strong & Actionable Watchlist

Everyone knows that watchlists are important in trading. Being prepared before the bell goes off is most of the battle and allows you to attack setups with a clear head.

Having a watchlist is like having a roadmap in front of you every day guiding you through the markets. Going in blindly is extremely tough and will cause you to make unforced errors and wrong judgements on the fly.

Today, I wanted to break down a few key components of what goes into an actionable watchlist. Not every watchlist is created equal, so making sure yours is effective is crucial. Let’s dive right in!

  1. Filter By Volume

A watchlist is supposed to be comprised of actionable setups. So, why would you want any tickers on there that trade thin, or don’t meet certain tradable criteria for yourself?

I use finviz to create my watchlists like I have shown before, and I always make sure that the basket of stocks I am looking through meet some of volume requirement. Usually, I like to see stocks that have 500k in average volume. Whatever your requirement is, make sure you stay consistent to that number every time you generate a watchlist.

  1. Choose Stocks That Have Range

Carrying on with the theme of making sure your watchlist is full of actionable setups, you want to choose stocks that move on a consistent basis and have range. You want stocks that are over- extended to the upside or downside or have a solid ATR (Average True Range) and are approaching breakout levels. By narrowing down your list when making a watchlist by looking for stocks with high relative volume on the day, big percent changes, or have high ATRs, you are making sure from the start the list you are filtering through will give you volatility.

  1. Analyze Longer Time Frames

Earlier this month I released a blog that talked about how important it is to zoom out when you are analyzing setups. You don’t want to be stuck hyper focused on smaller time frame ticks all day long. That is just pure noose that distracts you from the longer-term potential some of these stocks must move. When making a watchlist, look at the structure on the daily, hourly, weekly, and monthly charts. Find key levels that the stock is approaching, look for flag and range formations, breakout spots, etc. The longer the time frame, the stronger the pattern and level will be on it.

  1. Be Aware of The Macro Environment

Knowing what conditions, the overall market is in will help you create a very effective watchlist, especially if you are a swing trader. I am always aware of where certain commodities, futures, and indices are always. If you see gold (and by that, I mean Gold ETFs) breaking out for example, you can then drill down to stocks that are in that sector and look to trade those in correlation to the overall industry. A good thing to do is to create a basket of ETFs that cover each sector/industry group and look at them once a day. See which are weak and which are strong, and then drill down to stocks within that sector and look to play those. Think of it as trading ‘sympathy’ plays like we have talked about before.

Those are just a few things I do to make sure my watchlists are primed and ready to go with a basket of plays I can potentially take advantage of the next day. Remember, the purpose of a watchlist is to prepare yourself with ACTIONABLE setups going into the next day or week. So make sure you aren’t just stuffing your list with noise that ‘could’ be a decent setup… Make sure it IS!

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