My List
Master the art of creating and managing strategic watchlists to identify high-potential stocks and streamline your trading decisions
Creating and managing watchlists is a critical part of stock trading, allowing traders to focus on high-potential stocks while navigating ever-changing market conditions. This lesson explores how to build various types of watchlists to streamline your trading strategy—from tracking promising IPOs to focusing on institutional leaders and identifying top-performing stocks, or “Top Dogs.” By organizing these lists, you can monitor price action closely, assess stock potential over time, and efficiently narrow down daily trading choices.
Learning Objectives
By the end of this lesson, you will be able to:
- Create multiple watchlists to track IPOs, high-volume stocks, institutional leaders, and daily trade candidates
- Use list organization to identify and prioritize the strongest stocks
- Develop a “Top Dogs” list for focusing on market-leading stocks with high potential
- Regularly refine and review these lists to adapt to changing market conditions
The Role of Watchlists in Stock Selection
- Why Use Multiple Watchlists? Each list serves a unique purpose, helping you track stocks at different stages or with distinct characteristics. By categorizing stocks, you avoid being overwhelmed by too many names, allowing you to find quality setups efficiently.
- Scanning vs. Visual Filtering: While scans provide a foundation, refining your list visually helps you spot subtle opportunities. A “well-trained eye” is crucial for identifying high-potential stocks that may not be immediately actionable but are worth monitoring.
Essential Watchlists for Trading
IPO List
Track stocks that recently had an Initial Public Offering (IPO) to identify potential breakout candidates. The “sweet spot” for these stocks is often six to 18 months post-IPO, after their lockup period. During this time, institutions can start buying, potentially leading to a strong rally.
Example: Affirm
Affirm made a significant move after its IPO. By keeping Affirm on an IPO watchlist, you could monitor it daily and prepare for a potential entry when it showed strength.
Bull Snorts and High Volume Gappers
The “Bull Snort” list includes stocks with exceptional volume spikes and gap-ups that often signal strong buying interest. Add these stocks to a watchlist to track their performance and see if they build bases for potential entries.
Institutional Leaders
This list includes high-liquidity, blue-chip stocks that institutions are buying, such as Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA). Focus on well-known names with high institutional backing, which often show resilience and steady growth.
Example: Tesla
If a stock on your institutional list, like Tesla, maintains higher lows as the market declines, it may indicate strength and provide a strong buy setup once conditions improve.
Daily List
The Daily List is your primary list for tracking 30–40 stocks that show potential for trades during the week. These are stocks that are close to setting up or have favorable patterns but may not be immediately actionable. Monitor this list daily for entry points.
Example: Roblox
Roblox may not be fully set up, but by keeping it on your Daily List, you can observe its price action and enter when it’s ready.
Developing a Focus List for Immediate Opportunities
Purpose of the Focus List
The Focus List is a smaller, actionable list for each trading day. It includes stocks with specific setups you’re ready to act on. This list should only have a few names—usually no more than five—to avoid dilution and ensure you’re trading only your best setups.
High-Tight Flag Example
If a stock on your focus list has formed a high-tight flag and is set to break out, keep it on the list and watch closely for entry signals.
Reviewing and Adjusting the Focus List Daily
Add names that are showing clear patterns or triggers for potential trades, and remove those that aren’t progressing. For stocks that aren’t yet trade-ready but are important to track, you can keep them on the list to stay alert for future opportunities.
Top Dogs List: Focusing on the Market’s Best Performers
What is the Top Dogs List?
This list includes the absolute strongest stocks in the market—usually around 10 stocks that are either at the top of their sector, consistently outperforming, or show the highest growth potential. Limiting this list keeps you focused on only the best stocks.
Key Benefits
- Why Limit the List? Keeping this list small helps you allocate capital to the highest-quality stocks with bigger positions instead of spreading yourself thin across many names. Aim for a maximum of 10 to 12 names.
- Quality over Quantity: Focus on the absolute best opportunities rather than diversifying across many mediocre setups
Example: Nvidia Leadership
If a stock like Nvidia is leading the semiconductor sector and performing well even during down markets, it’s a top candidate. By focusing on it, you’re well-positioned to catch its future uptrend.
Action Items
- Set Up Essential Watchlists: Create IPO, Bull Snorts, Institutional Leaders, Daily, Focus, and Top Dogs lists. Adjust each list regularly based on current market trends.
- Refine Lists Weekly and Monthly: Reassess your Institutional Leaders and Top Dogs lists weekly to remove stocks that are underperforming or losing strength.
- Daily Review Routine: Review your Daily List and Focus List each night. Move stocks from the Daily to Focus List as they get closer to buy setups.
Conclusion
A structured, layered approach to building and refining watchlists allows you to monitor promising stocks effectively, anticipate setups, and catch early signs of strong moves. By limiting your Focus and Top Dogs lists, you stay concentrated on high-quality opportunities, ensuring better trade performance and more impactful positions. Integrate these lists into your routine and refine them regularly to stay aligned with market leaders and capitalize on promising setups.