Creating a day trade watchlist is one of the most important things you can do as a stock trader. Having a short list of stocks that meet your criteria allows you to spot opportunities quickly and make more money in the market. In this article, we will discuss five criteria that you should use when building your watchlist. We will also provide an example of applying these criteria to real-world trading situations.
What Is a Day Trading Watchlist
The goal of having a day trade watch list is to make it easier for you to find profitable trading opportunities. Keeping a list of tickers you are interested in can help you identify when a potential trading setup arises.
Putting together a watch list is not that hard. However, you do need to consider many factors when creating one.
The most important factor is finding good, solid companies. You want to find companies that are leaders in their respective industries. These are the types of companies that tend to be the most liquid and have the most upcoming earnings.
Another factor to consider is finding stocks that are moving in pre-market. These are the stocks that tend to have the most day trading activity.
There are different methods to create a stock watchlist. Some traders use stock screening tools to filter for specific criteria, while others keep a list of their favorite stocks. If you use screeners for potential stocks to trade, your watchlist may vary daily based on the criteria set. It is also possible to keep a stationary list of stocks you review daily for potential trade setups.
No matter how you create your day trade watchlist, the important thing is that it meets your needs and helps you find profitable trades. You do not have to have 50 or more stocks on your watchlist. We recommend keeping your active watch list relatively small. As you gain experience, you can add more tickers to your list. It is best to keep things simple and focus on a few familiar stocks.
Criteria to Build Your Watchlist
- Price: Price is the first criteria you should use when building your day trade watchlist. You want to look for stocks trading within a specific price range that are affordable. For example, if you are only comfortable with day trading stocks under $20 per share, then you would only put stocks on your watchlist that meet this rule.
- Volume: The second criterion you should consider is volume. You want to look for stocks trading with a high amount of volume. This guideline ensures there is enough liquidity in the market, so you can buy and sell the stock without any problems. Penny stocks would likely be omitted from your list because they do not normally have enough liquidity.
- Volatility: Another general rule is to ensure that there is volatility. You want to look for volatile stocks, so you can profit from the massive price swings and action. However, you also want to be careful with too volatile stocks because they can be difficult to day trade. A stock that is too volatile could lead to frequent stop-losses because the price may jump back and forth.
- News: The fourth criteria you should use is news. You want to look for stocks that have news about them, like news reports released during the pre-market session or earnings reports. News is important because this information can give you an edge that other traders do not have.
- Personal Preference: The final suggestion you should use is your personal preference. It would help if you were comfortable with your list of stocks. You should only day trade stocks that you are familiar with and feel comfortable holding for a short time.
By incorporating these five criteria, you can build a day trade watchlist that meets your needs. Remember, your watchlist should evolve as you become more familiar with the market and new opportunities arise. Do not be afraid to experiment with different stocks and different criteria. And remember – If you are not comfortable with a stock, then you should not day trade it.
Steps to Build Your Stock Watchlist
Now that we have discussed the five criteria you should use when building your day trade watchlist, let’s look at an example of how to apply these criteria to real-world trading situations.
Let’s say you are day trading stocks under $20 per share.
First, you will find a list of all the stocks trading under $20 per share. You can find this information on most financial websites. You can create a scan in your brokerage software, like thinkorswim, or websites like Finviz. Once you have a list of these stocks, you can start looking at the other criteria we discussed.
For example, let’s say you are only interested in day trading stocks with a ton of volume. You would then look at the list of stocks under $20 and find those trading with high volume (like 500,000 daily average volume). This information is also readily available on financial websites.
Once you have found a few stocks that meet your criteria, you can start looking for news about these stocks. This will help you get an edge on other traders unaware of market or company news. You can find this information on financial news websites (like CNBC or Yahoo Finance) or company-owned websites.
Popular Stocks on Typical Watchlists
We do not recommend or endorse the companies listed below. However, here are some of the top tickers you may find on many stock watch lists (just to give you an idea).
– Apple (AAPL)
– SPDR S&P 500 ETF (SPY)
– Amazon (AMZN)
– Google (GOOGL)
– Facebook/ Meta (FB)
– Tesla (TSLA)
– Microsoft (MSN)
– Invesco QQQ Trust ETF(QQQ)
– Zoom (ZM)
– Qualcomm (QCOM)
Simplifying Your Trading Watchlist
To make day trading work, you always want to simplify it as much as possible. When it comes to day trading stocks, one of the simplest–and most effective–strategies is to limit the number of stocks traded and just day trade with one stock.
Here are four reasons why day trading a single stock can help you make big profits:
#1 – You Can Get to Know the Stock
When you trade just one stock, you get to know that stock inside and out. You learn all its quirks and tendencies and what it is known to do. You understand how it reacts to news and events. This intimate knowledge is key to being a successful day trader.
#2 – You Can Focus Your Energy
When you trade just one stock, you can focus all your energy on following that stock. You don’t have to worry about keeping track of multiple stocks simultaneously or knowing what is happening here and there. This allows you to hone in on the day-to-day price movements and make better trading decisions.
#3 – You Can Avoid Information Overload
You won’t get bombarded with information about dozens of different stocks. This can help you avoid making impulsive and emotional decisions about your trades, which can be costly.
#4 – You Can Stay Disciplined
When you day trade just one stock, it’s easier to stay disciplined with your trading strategy. If you day trade multiple stocks, it’s easy to get caught up in the excitement of the market and make rash decisions. But when you trade just one stock, you’re more likely to stick to your plan and make reasoned decisions about your trades.
If you’re looking to day trade stocks for profit, consider specializing in just one stock. Our day trading strategy focuses on trading one stock ticker (SPY) and can help you avoid information overload, stay disciplined, and get to know the ins and outs of the stock market. And when you day trade just one stock, you’ll be in a better position to make big profits.
Summary: Day Trade Watchlist
A day trade watchlist is a compilation of stocks you keep an eye on for potential day trading opportunities. The most crucial part of building a successful watchlist is to have a set of specific criteria that each stock must meet for you to consider it. Although a watchlist can be very useful, it is always good to simplify your trading as much as possible and avoid trading multiple stock tickers.
Maurice Kenny has helped over 600 people become financially free through one-on-one coaching, mentorship, and options trading strategy. Many of these new traders are now full-time traders, and they all started by watching his 1-hr webinar.
Feel free to check out other FREE educational resources to help guide you as you begin your new journey to financial freedom.
Also, download a (FREE E-BOOK) by Maurice Kenny, “DAY TRADE LIKE A MILLIONAIRE.”