Traders that are new to the market typically ask, “How can I make money in the market? How should I trade?” They are expecting that there is only one way to make money. When trading in the market, there are numerous ways we can make money, just as there are numerous ways one can make a living. There is not only one right way to make money in the market. We can make money by doing longer trades or by doing shorter trades. We can be aggressive traders or conservative. How we trade is based on who we are. Are we aggressive or conservative? Do I have a lot of money to start with or limited funds? Is this for retirement down the road or is this to add some income now?
Since we will approach trades differently than others, a watchlist will take on many forms, customized to what it is we are looking for. We can have a bullish watchlist, a bearish watchlist, a neutral watchlist and everything else in between. We can create a watchlist for long term investing, short term investing, or everything in between. A watchlist is personal for us based on our likes, dislikes, personal preferences, and whatever may catch our attention at the moment.
A watchlist is meant to be changing. If we create a watchlist based on certain fundamentals, the list will be current as of now. In 3 months though, that list may be out of date. We need to update our lists on a regular basis. A watchlist may only apply to the current conditions of the market. Since we are in earnings season, an example would be looking for stocks that are announcing earnings next week. That watchlist would only be useful for a short period of time, at which point we can remove it.
There are numerous places to create a watchlist. One such place is http://finviz.com/ . This is a good place to create and store a watchlist. You can create lists on this site once you register in the upper right corner of the home page. All you need to provide is your email and create a password. The best part is it’s free. On this site, you can search for stocks that meet certain criteria (like earnings next week) by using the Screener. Once stocks are found through the Screener, you can just click on “save as portfolio” at the top of the list. You will be prompted for a name and then click on “save changes” at the bottom left to create a watchlist. You have the ability to create multiple lists which you can edit or delete.
A watchlist is critical to trading. The watchlist is our starting point for making money in the market. We need to be able to monitor and adapt our lists to the different conditions of the market.
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