If you trade stocks, whether it's penny stocks or not, you should be familiar with the term "watchlist".
Having one is essential for daytraders or swingtraders to be able to spot optimal entry points for buying or shorting a stock.
Without it, you are just randomly searching through the market in an unprepared state of mind.
Preparation is the key to success in every endeavor, and making a watchlist of stocks is some of the best preparation you can do as a trader.
For example, let's take a hypothetical situation of 2 traders.
1 had a watchlist of 10 stocks, the other did not.
The person that was prepared spotted 3 high probability setups out of the 10 stocks he was watching.
He made profits on 2 and was stopped out for a minimal loss on the third.
The trader with no watchlist goes through the message boards and pump newsletters to try to find something to trade, but misses a morning breakout in a penny stock simply due to the fact that he did not recognize the previous day's action in that stock that would have warranted placing it in a watchlist.
Out of frustration, trader 2 buys the penny stock at the high of the day and has to sell with a loss the next day or become a long term bagholder and pray for a rebound in the stock over the ensuing days/weeks.
Watchlist preparation has helped me spot trades that have doubled my money or more in less than a week, sometimes overnight.
Of course there is a certain knack to developing watch lists, depending on what types of stocks you like to trade or are interested in trading.
This involves technical analysis of charts, which is fairly easy to do in my opinion if you have a good head on your shoulders and you are hungry to make money trading.
Some technical indicators that will help you develop a good watch list are: above average volume, parabolic sar buy or sell signals, stocks moving above or below the 50 day moving average, new 52 week high or low and pincher play setups that involve the adx and ppo indicators.
Fundamental analysis can help you develop watch lists also, such earnings announcement dates which can induce major volatility into a stock.
Having one is essential for daytraders or swingtraders to be able to spot optimal entry points for buying or shorting a stock.
Without it, you are just randomly searching through the market in an unprepared state of mind.
Preparation is the key to success in every endeavor, and making a watchlist of stocks is some of the best preparation you can do as a trader.
For example, let's take a hypothetical situation of 2 traders.
1 had a watchlist of 10 stocks, the other did not.
The person that was prepared spotted 3 high probability setups out of the 10 stocks he was watching.
He made profits on 2 and was stopped out for a minimal loss on the third.
The trader with no watchlist goes through the message boards and pump newsletters to try to find something to trade, but misses a morning breakout in a penny stock simply due to the fact that he did not recognize the previous day's action in that stock that would have warranted placing it in a watchlist.
Out of frustration, trader 2 buys the penny stock at the high of the day and has to sell with a loss the next day or become a long term bagholder and pray for a rebound in the stock over the ensuing days/weeks.
Watchlist preparation has helped me spot trades that have doubled my money or more in less than a week, sometimes overnight.
Of course there is a certain knack to developing watch lists, depending on what types of stocks you like to trade or are interested in trading.
This involves technical analysis of charts, which is fairly easy to do in my opinion if you have a good head on your shoulders and you are hungry to make money trading.
Some technical indicators that will help you develop a good watch list are: above average volume, parabolic sar buy or sell signals, stocks moving above or below the 50 day moving average, new 52 week high or low and pincher play setups that involve the adx and ppo indicators.
Fundamental analysis can help you develop watch lists also, such earnings announcement dates which can induce major volatility into a stock.
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