Beat the Market by Building a Better Watchlist

I attribute my modest success as a trader to preparation and building strong watch lists. Entering and exiting trades is the easy part. Most of my time and energy is focused on narrowing thousands of stocks down to a strong, manageable list of stocks that will beat the market. This focus list, depending on market conditions, consists of 80-120 stocks that I trade from.

Today is a good example of how important it is to work off of a strong list of stocks. Yesterday the S&P 500 had the best percentage gain it has had in a number of years, posting a 2.92% gain. While that’s a great gain for the average stock today, it’s not so hot when compared to my focus list; 87 of the 100 stocks on the list posted a 3% gain or higher. In fact, 47 out of 100 posted gains of 5% or more.

Trading from a list that beats the market greatly increases your odds of beating the market. That’s why I spend so much time scrutinizing my watchlists. You’ve heard me say many times that I am not a stickler for precise entries and exits. However, I am obsessive about the stocks I trade.

Here are yesterday’s top 25 performers from my focus list:

10 thoughts on “Beat the Market by Building a Better Watchlist

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  1. That sudden reversal on BCSI looks strange. Warrants close monitoring and a tight stop.Love GRMN – I should have reversed yesterday and gone long… shoulda, coulda, woulda…TC

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  2. Too early to tell, but BCSI could be working on some sort of a double top – volume on the most recent rally to the top is markedly lower than the one in Aug.Also, this kind of a divergence with the overall market action is rarely a good sign for the longs.I think your stop here is a good one. I have an order to go short if it dips below 83.2.TC

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  3. Hans,I’ve posted about it before and have created videos that detail some of what I do. I’ll have to organize the site better to make important posts easier to find. I’ll probably post about building watchlists this weekend.

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  4. I think I have about 90% of the same stocks on my watchlist (and like you I spend a TON of time on them), however, my challenge is always the entry/exit! What tips can you give on the best way to approach this? With high beta stocks I am always nervous of a nasty reversal…we’ve seen a few lately.

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