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! 

Watchlist for February 27, 2014

Oh my gosh, this OTC market is absolutely insane right now! It's one of those rare periods where there is almost TOO much happening to keep track of! Tomorrow I'm going to try to focus on my favorite 3-4 setups to play right out of the gate, because if I try to nail everything, I'll probably get flustered and mess it up! Please, everyone, review this post to learn how to build these watchlists yourself. I don't intend to post them very frequently! To encourage a little self-sufficiency, I'm just going to post tickers and charts tonight. See if you can anticipate what my plan with each is and the ideal play I'm looking for!

Main Watches:

FNMA:

NVLX:

PTOG:

ELTP:

ONCS:

Keeping on Radar:

WPWR:

CANN:

PHOT

MCIG

Disclosure:

Long 45,000 shares of FNMA from $4.44ish

Long 600,000 shares of PTOG from $0.0344

Long 50,000 shares of NVLX from $0.394

Watchlist for February 25, 2014

I do not intend to create watchlists very often, as I'd much rather people learn to do them for themselves rather than grow dependent on mine. However, with the OTC market so active, I can't help but put up another! I will be running the same scan as in yesterday's watchlist. Please find the details of my process in this post.

Main Watches:

NVLX - Long 150,000 from $0.344ish. Another fantastic close - maybe blow off top tomorrow morning? Gap-up at least likely. I'll be selling my position if we're opening weak or into a morning spike. The chart is definitely getting overextended; so as soon as we get that g/r snap or a BIG morning spike, I'll definitely take a short position as well!

EKSO - Very impressive run so far! But the chart is undoubtedly overextended, so this is at the top of my watchlist for stocks to short. Like any other overextended short, I want to short either a big morning spike or a g/r move. I think $1-$2 of panic is likely once momentum finally breaks, although the panic could be choppy.

FNMA - Long 60,000 from $3.58ish. I can't believe this is third on my watchlist, but that's the market we're in! GREAT breakout past $3.50, I think a gap up and morning spike is very likely. If we get a weak open, I'll sell my long position and look to reenter into a morning washout anticipating r/g later. I think this has a multi-day run in it, possibly $4+ in the next day or two. Main thing I'd like to see tomorrow is increased volume.

VEND - Well, I need this to be shortable at Centerpoint tomorrow morning, or I can take it off my radar immediately. I'm stalking this for a short only - you guessed it, either a g/r snap or a big morning spike! This is finally speeding up and has held green two days in a row now; so I think when it snaps, it will be a nice washout.

Secondary Watches:

PAWS - Another solid green day but not the strongest close in the world. I might try a short on this when we get the g/r snap, but at these prices and with the lighter volume, I'm not quite as excited about it.

WPWR - Perfect breakout past $.45 today. If past Stocktips promotions are any indicator, this should run nicely now. I won't overnight it, because I'm too scared of a halt, but intraday I definitely will consider buying dips. Once this overextends, I'll stalk for the short, but that likely won't be for a few days.

MRNA - Great recovery after the morning panic today! I'm still hoping this can overextend more for the eventual short. That's the main thing I'm waiting for.

ELTP - Very close to that $.455 breakout! I'd like to see higher volume once we get the breakout, but I think $.50+ is possible if/when we get the break.

Feel free to contact me with any questions guys! I'm a little behind on emails right now, but I'll try to catch up soon!

Disclosure: 
Long 150,000 NVLX from $0.344ish
Long 60,000 FNMA from $3.58ish

Watchlist for February 24, 2014

I went over some basics as to how I build my watchlist in this post, however, I have found that people learn best through example. Reading pump emails is simple enough, but using scanners to find plays seems to be the area where most people need guidance. I'm going to pretend that I don't have any OTC stocks on my radar for Monday and start a watchlist completely from scratch, walking you through my step-by-step process. Future watchlists will not be this complicated. I just want to detail the process as best I can so others can learn to do this for themselves.

I know many readers of this blog use "Stocks to Trade," so I will run my scan on that platform. However, keep in mind that Equityfeed is a very similar platform, and you can set up nearly the same parameters. You will notice some differences in this scan from what I've previously discussed. There are a couple of reasons for this:

     1. I run this scan when the market is closed.
     2. I'm constantly learning and refining my strategies.

Here are the basic criteria I begin with:

• Only OTCBB or Pinksheet Stocks

I don't want this scan to include listed securities, so I specify that I only want to scan this sector of the market.

• Price > $.01

I normally don't trade subpenny stocks, so I exclude them from my scan

• $ Volume > $500,000

I want to only trade stocks with good volume and good liquidity. This is the figure that I choose to use.

• Trades > 200

This is a new criteria I use for my nightly scans only. Higher priced stocks can trade $500,000 of volume easily on just a few trades, giving the false impression of liquidity. I've put in a trade minimum to ensure these stocks get excluded from my list.

• Normal Securities, Q stocks, D stocks, E stocks only

You may have noticed that some OTC stocks have five letters in their ticker instead of four. Tickers with five letters have special designations, most of which you can see in the image below:

Above you can see the only options I choose to scan for are check-marked. "Stocks to Trade" and "Equityfeed" are nice because they allow you to leave out the rest. Most scanners don't allow you to cut out the other options. If I were using one of those scanners, I would just make a mental note to ignore all other five-letter tickers.

Once I have set these parameters, I run my scan. Below, you can see the full list of tickers that meet all my desired criteria:

Once I have this list, I begin pulling up the daily charts of all of these stocks and decide which charts have patterns that I'm the most comfortable with. If I like the chart, it makes my watchlist. I will often break my watchlist into two categories, "Main Watches" and "Keeping on Radar." Here is my list of charts from the above watchlist that catch my eye before prioritizing them:

PAWS
EKSO
MRNA
XXII
NVLX
VEND
FNMA
ELTP
WPWR
FITX

The stocks that are my "Main Watches" are the stocks that I believe are most likely to offer a clear-cut trading opportuity the following day. If I have quite a few "Main Watches," I will prioritize based on which ones I think will be most playable immediately at the market open. Stocks that I'm "Keeping on Radar" are stocks that are nearing a key price point that I believe would offer a play but may not get there the following day. I will often check the "Keeping on Radar" plays at least a few times a day, just in case one shapes up to offer the opportunity I'm looking for.

Now that you understand my process, let me show you my prioritized watchlist for Monday, complete with daily charts:

Main Watches:

NVLX - I'm long 85,000 shares from .294ish heading into Monday. The daily chart is overextending - but there was a speedup in price action on Friday, volume almost doubled, and it closed very strong. A gap up is very likely in my opinion, I would short a large spike or g/r move in the morning, but if the stock holds green this could really start to go crazy. I won't get overly biased one way or the other, and look to trade sharp, volatile moves.

XXII - Four up days in a row without going red, and chart is starting to overextend. Volume is lighter so executions will be tougher, but I want to short either a large morning spike or a g/r snap.

VEND - Hard-mailer promotion still going strong. This probably needs a few days to parabolic before shorting for the massive collapse, but I will consider any g/r snap or fast spike for a short sell scalp. As you can see on the daily chart, the stock has gone g/r multiple days, yet recovered each time.

EKSO - Overextending chart, I will take my typical approach with this and look to short either a large morning spike or a g/r move if it opens weak.

PAWS - Still a little too cheap to short with ECN fees... but Friday was a big up move so I'd be more likely to short a large morning spike than a g/r move.

Keeping on Radar:

FNMA - Would like to wait for the $3.50ish breakout before taking any sort of meaningful position, until then I might scalp fast, excessive moves but that would be all.

FITX - I really like how this is consolidating near its high, no play for me until $.115 breakout but I'll likely take a swing position if/when we get it.

WPWR - Stocktips promotion, $.45 breakout would be my main interest, as their past picks have had very successful breakouts. Not sure I can overnight this though as it's a blatant pump and SEC halts scare me.

ELTP - Another OTC with sold volume consolidating near its high, $.455 breakout buy is the only play I'd be interested in though.

MRNA - Start of a nice breakout on Friday. I'm hoping this can get overextended in the next day or two and set up for a textbook short. Just watching for now.

Some of you may choose different stocks or have different plans for them than I do, and that is absolutely okay! The goal of this post is to help some of you learn how to prepare. Whatever scans you choose to run or setups you choose to focus on is completely up to you!

Also, keep in mind that I will run variations of this scan throughout the trading day on Monday. If any tickers that I left off of my watchlist show sudden activity, I will be ready to add them to my list and I'll develop a plan for them on the fly.

I hope this gives everyone a better idea of how I prepare for the following trading day! The whole process is entirely chart-based and usually doesn't take me more than 15-20 minutes. Please feel free to reach out if you have any questions. Thanks for reading everyone!

Disclosure: Long 85,000 shares of NVLX from .294ish

Question: "How do you create your watchlists?"

My watchlists are actually pretty simple; not a whole lot goes into them. There are two things I use to build them - market scanners and my email address.

The email address is simple enough. All I have to do is check my email and see what stocks are being promoted by my favorite promoters (blog post on this coming soon). If the stock is trading good volume or has a chart pattern that I like, it is immediately added to my watchlist for the following day.

Market scans are slightly more complicated. I recommend one of two market scanners, either "Equityfeed" or the market scanner that comes with Interactive Brokers' trading platform. But what exactly do I scan for? Since I've made most of my money trading OTC stocks, the first thing I do is set my filter to only pick up OTC or Pink Sheet stocks.

There are a few criteria I look for when scanning the OTC market. I set my scanner to find stocks that are trading above $500,000 in volume, priced above $0.05, priced below $5, and up more than 5% on the day. This will pull up a list of stocks that meet this criteria for the day. Next, I look at the daily charts for the stocks that appear on this scan and look for chart patterns that I'm familiar with and like to trade. For example, I'll look for daily stock charts that are getting overextended, or perhaps close to a key breakout. If I like the chart, I add the stock to my watchlist. If I don't like the chart, I simply ignore it.

From there, it's simply a matter of prioritizing what I'm most likely to play the following day and which plays are more on radar than immediate plays. When the following day concludes, I decide which stocks to keep on my watchlist (based off of their charts), which to remove, and then I start the whole process over again.

Hope this clears up my preparation process! There really is no more to it than this. I don't dig through filings, I don't analyze news releases, I don't worry about what the message board trolls are saying. It's all about the chart and the pattern for me. If any of this isn't clear, feel free to leave a comment, I'll be happy to clear up any confusion!