Building a Watchlist
I've gone off the grid for a while as I can't think of anything to write about. I've a couple of unwritten posts here and there but nothing compelling for me to publish. I also thought of changing my blog name since I'm morphing into more of a trader than an investor due to the change in my circumstances whereby cash flow takes precedence over profits. But somehow Googirl Trader does not sound catchy at all...so I'll just leave it be I guess.
Building my Watchlist has been an interesting, tiring and seemingly endless task since I cover multiple markets plus having a switch from investing to trading style means a change in parameters as well.
When I was investing, low volume is ok with me since I don't need much liquidity plus I'm holding on for a long period of time. But when I started trading I had to gun for stocks that are liquid so that my orders will get filled and the charts are more reflective of the prices. This became a filter for me when I literally go through every single stock listed on the stock exchange.
After ensuring that volume is sufficient for that particular stock, I usually screen and read up a little on the company before going deep dive into FA. There's two schools of thought which is 1. If you are trading it doesn't mean shit whether a company is good or bad aka FA is redundant and 2. If you are trading and wish to have more confidence, conviction and whatever you call it, maybe it's wiser but takes a long time to also conduct suitable FA on the company.
ACCICB subscribes to the former and well as for me I used to be all for the latter but I may be changing...I'm not sure yet. I guess if you subscribe to the latter school of thought, if you screw up, you could still be saved if you hold on but then it can also come back and bite you if you continue to hold on to loss making stocks.
Currently and not funnily, all but 1 of my previous investments are SG stocks and it has actually gotten a point whereby I think I'm going to get paid while I wait for the stock price to recover and then I may nibble a bit more to average down and then just sell them off and forget about SG stocks. I seem to be making money in my foreign stock picks to plug the hole back in the SG stocks and it is not making me happy at all as it seems that I'm fighting a losing battle.
During FA, I come across stocks that I would invest but may not trade and vice versa so I may put them in their respective watchlists. Although there have been times whereby a small unknown stock does attract me despite the non existential volume and coverage, these are the rare gems that may have a slight sparkle if you pick it up but would take a long time for it to be polished and gleaming like the gem that it's supposed to be.
After FA is done or not done depending on your preference, I start to add them as bookmarks into my tablet and start watching the charts, using a simple s or b to indicate whether they are in the buy or sell zone, emoticons or short forms for candlesticks and if you like, the possible earnings date so you are aware of the potential upheaval approaching earnings announcement.
During trading hours, you utilize your watch list...may not pull the trigger even if everything seems right...at least for me since I like to watch it first and sort of familiarize myself with it before deciding. Indeed that would mean missed opportunities but then better to be safe than sorry seems to work for me.
Building my Watchlist has been an interesting, tiring and seemingly endless task since I cover multiple markets plus having a switch from investing to trading style means a change in parameters as well.
When I was investing, low volume is ok with me since I don't need much liquidity plus I'm holding on for a long period of time. But when I started trading I had to gun for stocks that are liquid so that my orders will get filled and the charts are more reflective of the prices. This became a filter for me when I literally go through every single stock listed on the stock exchange.
After ensuring that volume is sufficient for that particular stock, I usually screen and read up a little on the company before going deep dive into FA. There's two schools of thought which is 1. If you are trading it doesn't mean shit whether a company is good or bad aka FA is redundant and 2. If you are trading and wish to have more confidence, conviction and whatever you call it, maybe it's wiser but takes a long time to also conduct suitable FA on the company.
ACCICB subscribes to the former and well as for me I used to be all for the latter but I may be changing...I'm not sure yet. I guess if you subscribe to the latter school of thought, if you screw up, you could still be saved if you hold on but then it can also come back and bite you if you continue to hold on to loss making stocks.
Currently and not funnily, all but 1 of my previous investments are SG stocks and it has actually gotten a point whereby I think I'm going to get paid while I wait for the stock price to recover and then I may nibble a bit more to average down and then just sell them off and forget about SG stocks. I seem to be making money in my foreign stock picks to plug the hole back in the SG stocks and it is not making me happy at all as it seems that I'm fighting a losing battle.
During FA, I come across stocks that I would invest but may not trade and vice versa so I may put them in their respective watchlists. Although there have been times whereby a small unknown stock does attract me despite the non existential volume and coverage, these are the rare gems that may have a slight sparkle if you pick it up but would take a long time for it to be polished and gleaming like the gem that it's supposed to be.
After FA is done or not done depending on your preference, I start to add them as bookmarks into my tablet and start watching the charts, using a simple s or b to indicate whether they are in the buy or sell zone, emoticons or short forms for candlesticks and if you like, the possible earnings date so you are aware of the potential upheaval approaching earnings announcement.
During trading hours, you utilize your watch list...may not pull the trigger even if everything seems right...at least for me since I like to watch it first and sort of familiarize myself with it before deciding. Indeed that would mean missed opportunities but then better to be safe than sorry seems to work for me.
My personal style is: I do not look at my watchlists (during the most of the trading hours). There is a wise saying, you sit in front long enough of the blinking lights, you are bound to do a foolish trade.
ReplyDeleteHi Gideon,
DeleteThat's why you are the pro and I am not! I use the Watchlist as a filter rather than anything else... Then how do you decide which stock to buy during trading hours? Curious to know how the pros do it
I do not make my decision during trading hours. For my style, my ideal holding horizon is several months. What can happen within intraday only, would unlikely surface out to affect my decision.
ReplyDeleteMy decision making is done after trading hours, looking at historic data in weeks, months and years; and gel-ling across the macro landscape. The format for decision making in this case, cannot be raw prices in a watchlist.
When the time comes for me to make trades, I use mechanisms like:
- standing "hard" orders (price limit, price stop)
- "soft" orders (price alert via email, sms, apps)
So my price execution points are within a zone. That is, it need not be so precise within intraday for a trade to be successful. The window is not that big either (one or two days).
There may not be a single approach of doing things pros or non-pros (the goal is the same for all). I think the frequency to check/trade on prices would depend on the holding horizon. A intraday trader has to attend to prices quickly within an hour or miss the window. A holder of an asset for decade can afford to check prices every week or so.
Thanks Gideon for sharing your style. It's different from mine and seems like stressful...I still get palpitations at times when I see the prices jump on the screen...Since my ST goal is positive cash flow nowadays, my holding style is as short as possible to make some dough. That translates to days and stretches to weeks.
DeleteI'm not like sniper precise yet and i wish I've started this earlier since I no longer wish to hold an asset too long...but I'll buy and sell the same asset over years if it ticks all my boxes. That has worked well for me so far :)