Building a Watch List

New traders and sometimes not so new traders often wonder how more experienced traders have developed a stable of stocks that they constantly monitor looking for trade opportunities. The answer can be a very simple explanation to a lengthy conversation on how it was amassed. A watch list can help a trader track stocks and keep them all in one place so it easy to reference them. Potential trade opportunities are often discovered by scanning and searching charts from stocks that are on a watch list. Here are a few ways a trader might go about building a watch list or if he or she has one already, creating a better one.


Just Ask


Just ask another trader about his or her watch list. This may be the easiest way to build a potential list. It probably comes as no surprise to most people that traders sometimes have big egos. Traders love to be asked about trading stuff and there is no harm in asking other traders about what kind of watch list they use to find potential trades. This method can be very helpful in particular if a trader has no idea where to start. If the trader with a preexisting watch list agrees to share, it’s up to the trader to decide which stocks looks good for his trading personality and delete the ones that don’t match. The only potential problem to starting a watch list this way is a trader needs to know other traders. It’s hard to acquire someone’s watch list if you don’t know any other traders.


The Old Fashioned Way


Another way to put together a potential watch list is simply by scanning through a list of stocks. A good place to start might be looking at the Dow 30 stocks, Nasdaq 100 stocks and the S&P 500 stocks. Nothing fancy here. A trader just needs to punch them into his charting software and see if the charts and the options are at acceptable levels for his trading personality and plan. This list will surely be increased or decreased as time goes by based on an individual trader’s personality. Things a trader might want to consider when deciding to put a stock on his watch list are the stock price, the stock’s volatility, option prices and option volume just to name a few. When this process is complete, a trader should have a decent watch list in which to work with.




There are numerous trading services out there that not only might introduce traders to stocks they might have never heard of before but also potential trade opportunities. Some may be free but most probably charge a fee for their service. The potential problem with these services is evident. Some may be good and others maybe not so good. But with these types of services, not only does a trader have a chance to add to his watch list; he is also given some trade ideas too. The reason a watch list is created in the first place is to find potential trades. The Market Taker Edge is a newsletter that provides among other services potential trade ideas. Many of these trade ideas turnout to be excellent ideas but if the trade concept is unclear or deviates from a trader’s plan regardless of the source, it’s best to execute the trade on a simulated trading platform or not at all and just add the stock to a watch list for potential opportunities in the future.


What’s Important


These were just a few ideas about how a trader can go about developing a watch list. The most important part about having a watch list is not how it was acquired but that there is one. A well-refined and updated watch list can yield plenty of potential money making opportunities in option trading.


Dan Passarelli