I don’t believe in the theory of having a watchlist. Instead, I create actionable trading lists. The big flaw with the whole social media alert system that is so prevalent today is that you end up with 900 people following one guy’s methodology. And it’s just frankly stupid because those 900 people are going to encompass a wide spectrum of trading styles and processes, not to mention account sizes. When people are using a watchlist but they don’t trade the same way as the person who created that watchlist, they are probably going to fail — plain and simple.
Before you even start researching stocks to put on your trading list, you have to know very clearly what kind of trader you are. Do you trade small caps, banks, technology — what do you feel comfortable with? Are you a scalper, swing trader, options trader, crypto trader? You have to know what works for you and stick to it. From there, it’s possible to create an actionable trading environment where you can get high value with minimal risk.
So let’s get into the process of creating a trading list. Like every other seasoned trader on the planet, I know that gravity is real. The market can come tap you on the shoulder at any moment and the next thing you know your money is gone. Therefore, it’s critical to always be alert and to play devil’s advocate with yourself. The first thing that you have to do is a quick eye test of the indexes, which you’ll use to form an opinion as to whether the market is bullish or bearish. This has nothing to do with your setups — it’s just a matter of understanding the direction that sentiment is going to flow the next time the market opens.
Once you’ve done your due diligence, you can get into the actual analysis of potential trades for the following day. My trading list usually has about 5 ideas that I see giving me the biggest possible bang for my buck. I’m not looking for stocks that have “momentum,” like the ones that commonly populate most of those social media watchlists. You don’t chase momentum, you use technical analysis to chase a structure that will activate momentum organically.
So you’ll start going through lists of whatever it is that you trade and looking for value. The PS60 Theory states that stocks move from supply to supply and demand to demand, so that’s what I’m looking for as I analyze price action on these charts. I want to find stocks with the longest distributions and the tightest risk possible. For a stock to go on my actionable trading list I’d like to see a logical stop at around 10% of what I can potentially gain. If I see a stock that’s $1.50 away from crossing the next supply and only stands to gain another $2 if it does, the value isn’t there. But if I see a stock that’s got a long distribution, is $0.70 away from crossing supply, and the next supply is $7 higher, that’s a great value and it’s going on my trading list.
It’s really that simple. I can typically go through the Nasdaq 100 in about 5 minutes, have my list ready to go for the next day, and get back to spending quality time with my family. Once you know your process and you’re comfortable with the stocks you consistently trade, 5 minutes is really all it takes.
For an in-depth look at my process in action, check out the first installation of Access A Trader’s Weekend Breakfast Show. I get into how I create an actionable trading list starting at 27:23
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