Having a stock watchlist is probably THE most important tool to have as a trader but if you’re like most, you don’t really know how to use a watchlist.
A stock watchlist is not just a list of stocks you would like to buy, but can’t right now so you put them on a list to buy them in the future if they keep going up.
A watchlist is a smaller part of a larger system that involves using a stock screener to find stocks within your wheel house with nice chart patterns, and a defined pattern on the chart that, if it happens, you’re ready to buy the stock off your watchlist.
Stock Quotes Watchlist Overview
The stock quotes watchlist overview that you are about to see has resulted in hundreds of emails thanking me for teaching this awesome stock watchlist method. It is taught best if you just follow my exact steps. You can give it your own tweak later but while you are learning this method, just duplicate my steps exactly. Trust me, this is going to be one of the most valuable stock trading lessons you’ve ever had.
Go to Finviz and register for a free account here.
Log in to your free account on Finviz and then click on Screener on the top bar:
Click on “All” on the filters bar, enter the settings I show below, then click on “Charts” on the lower bar (click on image below to enlarge):
Save this screen in your account so that you do not need to keep re-entering it each time. To save the screen click on MyPresets in the upper left corner then select Save Screen:
You will see a bunch of charts appear in the lower part of your screen. You may have to scroll down to see them. Now we are ready to start building our stock quotes watchlist for trading the next day. Keep in mind, we do our research and build our watchlist after market close for the next trading day. Try not to build your watchlist during market hours. During market hours your total focus should be on trade execution (scaling into the trade, and setting your limit order and stops).
What you are looking for in your list of charts is an oversold stock that is at key support. Here is the ideal chart you are looking for:
What makes this stock such an excellent addition to your stock quotes watchlist? Notice that the price is at key support. Also the RSI is in oversold territory. This stock is NOT a buy right now. You have heard the cliche “Don’t try and catch a falling knife”. This stock is a falling knife right now. It might break through support. You add it to your watchlist but you do not buy it. It is on your watchlist because you are waiting for a candle over candle pattern to form before buying. Having it on your watchlist allows you to be patient and to stalk the stock.
Now that you have a list of stocks that are candidates for adding to your watchlist, there is one more filter you need to put these stocks through and that’s a human filter. This is the most time consuming part of your nightly watchlist building. You need to go through the news stories of each of these stocks and ask yourself: “What is the catalyst that can cause this stock to reverse and head higher?” What is the “story” of the stock. What can cause buyers to come into the stock and short sellers to cover? It has to be a news event and not a chart event. Do not confuse a catalyst with technical analysis. If you need help in determining what a catalyst is, check out this lesson here.
Any stock that does not have a catalyst of some kind, you need to throw out.
For the stocks that do have a catalyst, add them to your watchlist so that you can stalk them for a candle over candle reversal.
To create a Watchlist in Etrade Pro click on “Tools” at the top of the screen, then select “Watch List”:
Here are a couple of charts that have a candle over candle pattern that you want to actually buy the stock when you see on the daily chart:
If you are able to watch your stocks in real-time during the day, then you can use the Opening Range Breakout strategy for your entry. For example, check out the chart below:
You add ELX to your watchlist because of the doji candlestick and the curl coming out of oversold on the RSI. You like the catalyst in the company’s news releases.
You decide you want to use the first 30 minutes to establish the OR High and OR Low price levels. When the price breaks the OR High, on the intraday chart, you buy the stock.
Frequently Asked Questions about Stock Quotes Watchlist
What is a stock watchlist?
A stock watchlist is a systematic way of tracking stocks and waiting for certain criteria to be met–such as a candle over candle reversal, curl, or resistance level break–before taking an entry.
David Blair posted the video below on how he uses stock watchlists. While I don’t recommend the exact trading strategies David Blair is using, I want you to see how other traders use stock watchlists to expand your thinking about the possibilities of watchlists.
What is scale trading?
Scale trading is the act of buying smaller amounts of your intended position in a stock such as in 1/4ths or 1/3rds, as the stock consolidates or rises. Do not confuse scale trading with the strategy of doubling down to lower your cost basis (which is something I do not recommend doing).
Some of the best traders on Wall Street use scale trading.
There are many different scale in/scale out methods of trade management.
LightspeedTrader posted the excellent educational video below called Scaling and Sizing for Bigger Profits | Lightspeed Trading.
What does it mean when a stock is oversold?
A stock is oversold when any of the following conditions are true: the RSI is below 30, the stochastic is below 20, or the Williams %R is below -80.
The most accurate and widely used oversold indicator is the RSI.
PerfectStockAlert.com posted the excellent video below called Trading with the (RSI) Relative Strength Index.
PerfectStockAlert.com also posted the video below called How to trade stocks using the Slow Stochastic Indicator.
Keep in mind that oscillator indicators like the RSI, stochastic, and Williams %R work best in a trading market. You know when a market is trading because the ADX line is falling.
The time to create your watchlist is after the market closes, before the next trading day. Once trading starts the next day, your main focus should be on trade execution and not on stock research.
A watchlist brings discipline to your trading. It helps you to not chase a stock by buying on spontaneous impulse because of a PR or earnings announcement.