One of the ultimate goals of trading is to make your account as autonomous as possible so you take out emotion. Emotion is the enemy of trading and leads to bad decisions that cost us thousands of dollars. A great tool to add to your arsenal of trading is a watchlist. In this article, I’m going to be explaining what a watchlist is and how it can allow you to avoid looking at your account all day.
What is a Watchlist?
A watchlist is simply a tool you can add to your trading platform that allows you to input stocks to keep track of their daily movements.
You simply input the symbol and the stock is added to your watchlist. You can even insert certain categories to make it more organized if you have a good number of stocks you are looking at.
- Snapshot of Price Change
- A great benefit is that you can look at your watchlist at the end of the day and immediately see what the change in price is from previous close.
- You can see how news stories affect a move in the stock for that trading day. Often times the watchlist is linked with news articles so if there is a substantial price move, you can quickly find out what caused it.
- Volume drives a stock’s price and you can immediately see if there was more or less shares traded than average during the day. If there has been substantial volume recently it should be an indication of what direction a stock might be heading.
The watchlist allows you to add alerts to stocks if they meet certain criteria that you select such as a particular price. Traders will use technical chart patterns to get into a stock like ones we have discussed previously in other articles. These patterns include wedges, head and shoulder, and channel patterns. The main goal is to enter into the position on a price breakout. Instead of watching a stocks price all day, you can simply add an alert that will notify you if a stock touches that price. This is an easy way to automate your trading and only buy in when the price is right. Once the alert is triggered it can be sent to your phone via text, your computer, or notify you from a trading app you have with your platform.
Homework: Start a watchlist with at least 5 different stocks and start tracking their price movements. A watchlist can be made using a free professional trading platform such as Schwab’s Streetsmart edge or TD’s Think or Swim and can also be made on free finance websites such as Yahoo Finance or Google Finance. Figure out how to add alerts to the watchlist so you can begin to automate your trading.