Watchlists are the key to staying focused not only during your chart reading sessions, but also during your trading day. You do not want to be searching any ticker you can think of at the open to find a decent trade. That is a sure fire way of allowing your emotions to take control of your trading.
It is important to keep watchlists to keep your focus on select names. Here are some watchlists I use.
Core Trading List
This is my core trading watchlist. These are charts I go through at least once per week to find setups. I know these tickers. I know how price moves and I know how SPY, VIX, and other market moves will effect said ticker’s price.
This is a major advantage of building a core trading list. It will take time, but eventually you will gain an understanding of how each ticker’s price moves.
My list is focused on on technology and growth stocks, but I have sprinkled other tickers in as well when growth is not in favor. Utilities, blue-caps, real estate, financials, etc. It is okay to have your focus, but it is imperative to have at least a few tickers from each industry to understand overall market dynamics and to take advantage of sector rotation in a healthy market.
This watchlist is my focus list for the day and/or week. These are only the best setups. I like to keep this list under 10. I do not want to be shuffling through 20 tickers in the middle of a trading day. Too much noise. This list may also contain tickers reporting earnings, but remember, always wait until after the report. Otherwise, you are gambling. That is okay, but understand your risk and adjust accordingly.
This list can be broken down into two lists if you prefer: Bearish & Bullish Focus Lists. This is especially helpful if you are day trading. If you are swing trading over a few weeks, you can get a grasp of whether your bias should be bullish or bearish. But if you are day trading, your bias can shift mid-day.
Uptrending & Downtrends Lists
These are tickers taken from your Core Trading List which are in an uptrend or downtrend, respectively. As described in the previous lessons, define your trends based on the 1D EMAs. The more EMAs in order the stronger the trend.
Other Lists You May Consider
52 Week Highs & 52 Week Lows
These watchlists can be dynamically used on Thinkorswim so that they update automatically or you can use sites like Finviz or even update as you come across them in your chart sessions.
These are watchlists that feature indices for different sectors. The Spyder Indices are a good choice here. Some examples are XLRE for real estate, XLK for technology, and XLF for financials. Having these charts handy will give a good grasp of what sectors are hot and cold so you can play tickers from those sectors accordingly.
Tickers by Sector List
This would be a group of watchlists with each individual watchlist representing a different sector. You could have a watchlist called Financials and include Financial tickers. You can take that a step further and niche financials down further into banks, capital markets, and insurance too.
Organizing Your Watchlists
I like to keep my watchlists clean so here is what part of my core trading watchlist looks like:
Ticker, % change, sector, and market cap. The last 3 columns are custom scripts which tell me the EMA trend without looking at a chart for different timeframes. If the background is the green, then the 34-EMA > 55-EMA for said timeframe. The number represents the % difference between the 34-EMA and 55-EMA. The larger the number, the stronger the uptrend, and the smaller the number, the stronger the downtrend. Numbers close to zero may identify a weak trend, consolidation, or a possible reversal.
This custom script is especially helpful because now I can sort based on the strength of the trend. If I am looking for bearish setups, the tickers at the top of my watchlist in the screenshot below will have my best odds to identify setups as they are sorted by strongest downtrends from a 1D chart.
Take a look at the strong downtrend on PAVM.