February 13, 2007 at 2:34 pm | | Comments 7

Watch List Management

All traders keep watch lists in one form or another. Maybe you jot yours down on a whiteboard in your office or keep some scratch paper close by to write down the symbols you’re keeping an eye on. You might store your watch lists inside your trading platform or charting program. Regardless of where you store it, it’s a fact of life that even watch lists need a little spring cleaning.

My personal preference is to store and manage my watch lists in my charting program TeleChart. (I’ll cover the reasons why in another post, but for now I’ll stick with the subject of managing my watch lists). On a regular basis, I do find that I need to remove certain stocks which no longer fit my trading criteria (for price, volume, volatility, etc.), or which are no longer anywhere close to areas from which I would initiate new entries. I want to keep the list clean and organized and of the highest quality possible, as that will let me quickly find trading opportunities when the conditions are right.

Timing is Everything

Every one of us is busy, so it can be hard to set aside some time to streamline our charting process. I’ve found that when the market stagnates, it’s the perfect time for managing my watch lists. Whether it’s an intraday lull in the action or it’s just shaping up to be a slow week (like Bernanke scheduled to speak the next day), these resting phases in the market action tend to free up my attention from trading. It’s on these days that I devote some time to removing the dogs from my lists so that I can refine and rebuild my watch list. I make sure to also remove any clutter which no longer belongs on the list (stocks which now have significant gaps, have reversed suddenly, or simply are no longer poised for the initiation of a new swing trade).

Here’s an example of a stock I recently removed from my watch list. OSG had provided some great shorting opportunities in recent months (note the lower highs), but once it cleared the previous high recently, the downtrend was broken so I took it off my watch list.

Making Space for New Ideas

By paring back my list to only those stocks which meet my criteria, I also create space for adding new names to the list. Freeing up some room for new watch list candidates lets me get to one of my favorite activities in the market: scanning and sorting. I love to dig up new trading ideas and locate the stocks which were previously flying under the radar, but I’m less inclined to do this if my watch lists are already too large to use effectively.

Managing my watch lists also includes redrawing trend lines, updating new support and resistance levels, and of course locating new chart patterns. This also contributes to the flow of new ideas as refined entry and exit levels become apparent. My watch lists are truly the lifeblood of my trading!

So the next time the market slows down and enters a resting phase, remember it isn’t worth trading. Instead, use that time to build and edit your shopping list so that once things do start moving again, you’ll be that much closer to having your game plan in place. Put on some good music, kick back and work those watch lists!

Jeff White
President, The Stock Bandit, Inc.

[tags]Investing, Swing Trading, Day Trading, Stock Watch Lists, TeleChart[/tags]

Related Articles: