I get dozens of emails and requests everyday asking me about how I make my watchlist. My routine is simple. Every trader needs to take the time to prepare and make trading plans before the market opens. You cannot consistently make money by following others' alerts.
You don’t have to do exactly what I do to be successful. Design and personalize a routine that effectively prepares you for the trading day. Here’s an overview of my trading routine, and what I look for on the stocks that make my watchlist.
I go through manually about 500 stocks on my master list every evening before the market opens the next day. Those names come from liquid growth stocks, stocks from various sectors, and stocks from various scans (most are available if you google them) via stockcharts.com that i run including 4% movers from Finviz.I am an avid user of IBD for investment ideas and MarketSmith built in scans to find next winner stocks.
You can also use TC 2000 and many scans are available online for free. It is nothing complex that you couldn’t do yourself. I will filter by volume, as I try to avoid illiquid names.Lately I’ve been focused on short plays due to the weakness in the overall markets.
Patterns I Look For
I am looking for various patterns, including support and resistance breaks, moving averages, bull flags, bear flags, base breakouts, and consolidation breaks to either direction. I believe there are no magic scans that will produce winners automatically. You need to know how to trade them . I will put my top pick stocks on my master watch list and stalk them, sometimes for days for a possible setup. This way I am familiar with that particular stocks movement, and better understand how I will trade it once it sets up.
Create A Trading Plan
The best trader in the world could share his or her watchlist with you, and you still could lose money trading the exact same stocks. It all comes down to execution. Knowing which stocks to trade is actually only half the battle of being able to consistently profit from the stock market. Your trading plan is just as important as the stocks you choose to trade.
Before every trade, know what time frame you are investing on, how many shares you will buy or short, how much money you will risk, what price(s) you will enter, what price you will stop out, and what price you will start to take profits. Having all of these things planned out will allow you to be calm and confident once the market opens. If there is no plan, there is no trade.