My basic trading philosophy can be summed up by one simple quote:

"Trade the ticker, not the company" - Nate Michaud

Thursday, September 10, 2015

More Details About My Watchlists

For the past six months or so, those of you that follow me on Twitter may have noticed that I've been posting a list of stock symbols that I'm watching for the following day. I'll be the first to admit that this is not at all detailed regarding my plans for my trades - I just want people to have an idea of what I'm looking at. For those of you who haven't been following me, below is an example of what one of my watchlists might look like:

The responses I receive from users who view these watchlists are far-ranging. The most common question I'm asked is, "Long or short?" Sometimes, one of the stocks will make an especially severe move in one direction or the other and I'll get a "Great call!" Or every now and then I may even get an especially entertaining troll warning me not to short their company because it's going to save the world with whatever miracle product they're working on. Regardless of which of these categories you fall into, I want to provide a little bit more detail about what these watchlists mean and what I'm thinking behind the scenes that you don't see.

For those of you that missed HOW I pick tickers for my watchlists, you can find my OTC scan parameters in this post, while my listed stock scan requirements are in my 2014 Vegas presentation slides. Once I have these tickers, what is my plan for them?

The truth is, when I list these stocks, I probably am short-biased most of the time. When I say short-biased, I mean that the primary play I'm looking for the next day is a short sale opportunity. But this is not always the case. There are some long setups I like as well. Which way I'm biased is always affected by the "big picture", how the daily chart looks. I run my scans, I look at daily charts, and I cherry pick the setups that I think I may have an edge with, long or short.

While all you see may be my list of tickers, far more goes into my watchlist than that. Below, you can see an image of the FULL watchlist that I created for myself the night before September 8:

As you can see, I have very specific plans for each ticker. In some cases, I have a plan for both a long AND a short opportunity, should the setup present itself. Just because a ticker is on my watchlist does not guarantee I will trade it the next day! When I pick my stocks, I have a VERY specific scenario I'm looking for in order to make a play. If that scenario doesn't present itself, I will not feel compelled to do something anyway with the stock. In some cases a stock I was looking to short will fade away all day, but I won't trade it once, because it never gave me the ideal setup I was looking for. I have absolutely no problem missing the play if that is the case.

This is how I trade day after day. My list of stocks changes, my plans change depending on the daily chart (and in some cases, some intraday details), and then the next morning I look for my top watches to, hopefully, give me an opportunity I planned for. I'm watching these stocks because they're liquid, because they're volatile, and because they're the most likely to set up in a chart pattern that I'm familiar and comfortable with. 

I'm sorry I don't share my full watchlists on a nightly basis, and I have no plans to do so. I really do believe that it's possible to be too spoon-fed when it comes to trading and that it will hinder newer traders' development if they're just trying to follow other people's plans. I'll let you know what I'm watching, but you will only improve by making your own plans, trading your own niche, and looking for the setups that YOU are comfortable with. This may also mean making your own mistakes, but I know that I wouldn't have become a successful trader if it wasn't for learning from the mistakes I made day after day when I first started trading. Even now, mistakes are my best learning tool.

I hope my nightly list of tickers continues to be helpful, but I encourage all of you to form your own bias, make your own plan, and learn from your mistakes along the way!