Compiling My Watchlist

Here are my thoughts.

The keys things about watchlists are as follows IMO :

1) The size of your list is related to the timeframe that you trade. The smaller the timeframe the smaller the watchlist needs to be. Say you are trading the 5 min candles. If your watchlist is 40 stocks then are you going to be able to cycle thru all those stocks in quick enough time to make a trade ? I doubt it.

2) The size of your watchlist is related to your experience of looking at charts and recognising patterns. If you take your time and mull over charts and s/r levels etc, then your watchlist needs to be smaller, otherwise again you will not be able to get thru them all. If you can take 15 secs to look at a chart and either trade or discard it then you can have more stocks in your list.

3) You will read other blogs websites etc and see stocks which you missed off your list. There is no way that you can get everything. Accept it as fact. All you need is a few stocks from YOUR list which showed the patterns and entries and you will be fine.

4) As the trading day progresses the best looking charts need to migrate towards the top of your list, so as you cycle round then these are the ones which you will be in a position to trade first.

5) The longer the timeframe you trade the more time you have at start of the day to set up your watchlist.

So what do I do ?

1) The scanner I use is the gap scan from my broker IB and also from my backup broker Tradestation. That's it, no other scans at the moment.

2) I don't start compiling my list until after the market opens. I.e. I do not have a premarket scan or have a predefined list of what to trade before the market opens.

3) About 10 mins after market opens I run my gap scans from IB and Tradestation (both gap ups and gap downs). I use volume > 100k and price between $15 and $200. I scan both Nasdaq and NYSE. This gives me around 40-60 stocks. If there are any with very wide spreads then I discard them. If the gap is very wide (e.g. 25%) then I tend to ignore them. If the total number is greater than 60 then I just use the ones with higher volume.

4) After the first 15min candle, I go thru the charts of all these stocks and whittle them down further as follows : (N.B Some of this whittling down is done as part of the scan for the Tradestation scan).

• Discard stocks which are not outside the previous day's high and low.
• Discard stocks which have unusual first candle e.g very long wick, tail etc.
• Discard stocks which have less than 150k volume in this first candle.

5) After the second 15min candle, I go thru the charts again and whittle down the list again in case stocks have retreated into yesterday's high-low range.

6) So after 30 mins I normally have 20 to 25 stocks to focus on. Maybe more on some days.

7) After the 3rd candle I am arranging my charts and watchlist so that the best looking charts are at the top of the list and viewable on my top page of 9 charts. I am watching these stocks to see how they behave relative to the general market.

8) As each candle comes to the close I am looking at these top 9 charts for potential trades. And also cycling round the rest of my list. Any stocks which get into yesterday's range are discarded and any which are moving heavily against the gap are moved to bottom of my list. In addition I am monitoring these stocks using Tradestation Radarscreen which I have coded for my setups.

9) By the 5th to 6th candle finishes, this is starting point of where I tend to enter trades. And so the best stocks are near the top and I have probably whittled down my list even further. So in reality I only need to look at 10 or so charts and hopefully find a few trades in these.

That's about it really. I like to keep it simple. The key thing is really to try to keep your watchlist numbers down as much as possible. Otherwise you may be forcing things and taking sub-par setups.

Hope this is useful. If anyone has any comments or wants to post how they do it, then feel free to post it here for everyone to read.