Building the Watchlist | Podcast Episode #466

0:00
Hey everybody, this is Ryan Mallory with shareplanner.com’s Swing Trading the Stock Market. In today’s episode, we’re going to talk about building a watch list.

0:07
I have a 17 year old who’s been in the show. This is the second time writing the show actually, and a pretty good question that he’s writing

0:14
about he’s he’s really wanting to know some of the basics of watch list building. So we’re going to go ahead and address those matters here today for a good Florida name because I

0:24
don’t give people’s real names out. I try to keep everything anonymous.

0:27
I’m the only ones that read these emails in their original format. Least I read the emails to you guys that obviously.

0:34
But I I change out the names. I’m going to give him a good Florida name of Otis ties back into the Andy Griffith show that I was

0:41
watching with my parents when I was growing up. Still like watching it to go down memory lane, even though that show was definitely before my time.

0:49
Anyways, Otis writes. My name is Otis.

0:53
I am 17 years old and have been studying the stock market investing for a while now. I have had a podcast episode done once before.

1:01
I have gotten into paper trading to get a feel for how to buy and sell, set stop losses, etcetera. But I am now looking forward to starting a cash account.

1:10
One thing I was questioning was how to create a stock watch list for someone just starting out. How many stocks would you recommend I watch and what would be an appropriate number to start My

1:20
Portfolio with? I want to be able to not spend a ton of time on my computer considering I am a full time student.

1:25
How do you select stocks for your watch list? I know you implement a top down trading strategy.

1:30
Where do you go to look at sector and industry performance? What would you say is your biggest fundamental aspect of a stock that you look at before considering

1:38
it? Finally, what is the biggest piece of advice you would give to a new trader?

1:43
I would really appreciate a podcast episode about this. Thank you for what you do.

1:47
It has helped me increase my knowledge of trading by leaps and bounds. God bless Otis.

1:52
All right, so some really good questions there. I think for Otis, going from paper trading to cash trading, that’s going to be a big leap.

2:02
And I’ve said this in other podcast episodes, why it’s so important to recognize the difference between paper trading and cash trading and paper trading.

2:11
You can build a lot of confidence. You can think that you’re a lot better than than what you are as a trader because the emotions are not tied to it.

2:17
The, the, the potential for loss is not there with paper trading.

2:22
Heck, it doesn’t matter if I use stop losses or not in paper trading because if I don’t like the outcome of the trade, I can just reset the account and risk management doesn’t really matter.

2:31
It doesn’t mean that if you start off paper trading, which I think it’s great for people to do to, to learn the mechanics of trading, that you shouldn’t use risk management because you’re practicing

2:41
for when you go, you know, in front of the lights and, and play with your own money. It’s not necessarily essential because there’s, there’s no success, there’s no reward that’s tied

2:52
or, or pain and suffering that is tied to trading with a paper account. So when you make that leap, know that whatever success that you had in paper trading is going to be

3:00
much more difficult to come by when you go into the the real cash trading, because at that point, the wins and losses are permanent.

3:11
So you you take a loss on a trade that’s permanent. You can’t just hit a reset on the account.

3:16
So the emotions are going to be a much bigger. That means the emotions are also going to affect your trading judgement.

3:23
That’s why I’m I’m so big on the idea of planning out your trade before you ever get into the trade. Because once you’re in the trade, the emotions are at their peak.

3:33
That’s where it’s going to be much more difficult to make rational decisions because you’re actually dealing with real wins, real profits, real money, real losses.

3:42
And so your judgement gets skewed the time where you’re, you can best emulate what it’s like when you’re trading with a cash account, but the but for it to feel like a paper account is when there’s

3:54
no money, a tied when there’s no money tied to it. So if you can get to that point where there’s no money tied to it, which is when you’re not in the

4:01
trade, the better off you’re going to be. So about creating a stock watch list, he asks, you know, for someone just starting out, how many

4:11
stocks would you recommend and what would you recommend watching and what would be an appropriate number to start My Portfolio with?

4:18
For one, I try to, I, I keep a, my, my 2 main watch list, 1’s a bullish watch list, 1’s a bearish watch list.

4:26
I have watch lists that are like, you know, must must watch stocks. These are stocks like NVIDIA, Amazon, MasterCard, Bank of America, Caterpillar, your your basic big

4:38
movers. And in each of the sectors that I do watch on a regular basis, I always want to know what are those prices doing?

4:44
Because they’re going to be reflective of the broader market, broader economy that the different sectors.

4:49
Like if you want to get a good idea for what industrials are doing, something like Caterpillar or Northrop Grumman, it’s going to give you a good feel for how industry industrials are performing.

4:55
If you want a good feel for how the banks are performing, something like Goldman Sachs or Bank of America is going to give you that feel for it.

5:03
So there’s that must watch watch list that I keep of about 100 stocks and I’m always going through those.

5:10
But outside of that, there’s and, and I’m not talking about scans.

5:15
It’s always important to understand the difference between scans and watch. The scans are essentially the the mechanism that leads to you creating your watch list and what the

5:22
results you get from your scans are not going to be always all included. In fact, most of them won’t be included on your watch list if you’re putting any time and effort

5:30
into it. I’d say I do a scan and, and maybe at best 1/3 of the stocks make it from the scans to the the watch list that I do each week.

5:39
So I keep a bullish and bearish watchlist.

5:43
Those are the main ones and those are stocks that I’m looking to trade or potentially could be traded within the next week.

5:50
So if if I’m looking at a stock that’s trading at $70.00 and it’s got this big long term cup and handle pattern that’s forming and it can confirms at $90.00 and it doesn’t really have enough

6:02
volatility or beta to get to necessarily $90.00 within the next week. I’m not going to include it on my watch list.

6:07
Even though it has a bullish pattern setting up and could eventually down the road be a good trade setup.

6:12
If, if there isn’t something there to suggest that it could be traded within the next week or potentially traded, I’m not going to waste my time with it because then I’m just wasting time going

6:22
through that stock in my watch list that has no chance of being traded anytime soon or a very little probability at least of being traded anytime soon.

6:30
So there’s never more than about 50 stocks or so, you know, 50 to 60 stocks I’ll keep on my watch list at any time, but that’s, you know, 50 or 60 for bullish, 50 or 60 for bearish.

6:40
But I won’t go above that. And the reason why is because then you’re just the, the, the organization side of it when you’re trying to find go through charts.

6:46
I can go through about 50 charts in less than a minute, but I can’t go through that many.

6:52
But when you start getting beyond that, then it’s becoming a very time consuming exercise. Like I don’t want to spend 10–15 minutes going through my watch list when I need to trade within the

7:01
next few minutes. So that’s, that’s the case there.

7:06
Now the stocks that I’m including on my watch list as well doesn’t necessarily have to have an ideal stop loss or risk reward.

7:12
These are stocks that are developing bullishly that that could be traded. And the emphasis is on could because then once I identify a trade step that looks pretty good, then

7:21
I’m going to be looking at the reward risk aspect of that chart and say, OK, is there something that I can take advantage here?

7:27
Is there an edge that I have where I can maximize my reward while keeping my wrist tight? If I can’t do it, even if it’s on the watch list, I’m going to go ahead and move on to the to the

7:35
next trade setup there. So the inclusion on my watch list doesn’t necessarily mean a a perfect trade setup.

7:41
It means a stock that’s bullish for one or if it’s on the bearish, it’s going to be bearish. But let’s just focus on the bullish 1 here.

7:48
If it’s bullish, then I’m going to going to include it, especially if it’s one that I, I know that I can be able to trade within the next week or so.

8:00
What I try to filter out and my, my scans for when I’m creating my watch lists, I’m, I’m really trying to filter out the stocks.

8:07
I have no desire to trade. I think especially in the case of Otis here where he’s 17 years old, one of the big emphasis that I would say to him is get as many charts in front of you as possible.

8:14
I’m a little bit concerned by the fact that he says he doesn’t want to spend a lot of time in front of his computer.

8:21
I know at 17 there’s a lot of things that, you know, are going on from a social standpoint.

8:27
You know, at 17, I’m guessing maybe you’re like a junior or senior in high school and there’s probably sports and activities and homework.

8:34
And you know, you’re obviously you’re, you’re probably in school when the stock markets open during the day.

8:37
So that’s going to, you know, prevent you from really being able to, to watch all the watch the, the intraday price action.

8:44
But I would definitely go back when you get home at night, review the intraday price action because right now you’re a sponge at 17 years old, your memory is going to be better than it’s ever then

8:53
then it’ll ever be in the future. Your memory is good.

8:57
You’ve your recollection is going to be good. You can learn a lot.

9:00
You’re in the learning mode right now with school and your studies. Add the stock market to it as well, even if that means that you got to stay up later at night or if

9:08
you have to forgo, you know, some other activities that might might get in the way of it. If you’re serious about trading stocks, then, then then learn as much about it as you can because

9:18
the things that I’ve learned today are are because of the things the books that I picked up when I was 20 and when I was 18 or 19 years old.

9:27
Those those books are still with me today. Those are books that played a huge role in developing my technical outlook.

9:35
And so don’t try to avoid the charts at your age. The more charts you’re looking at, look at thousands of them if you can.

9:42
I mean, in a given day, I probably go through 1000 charts, but try to set that as the maybe a goal of like 3 or 400 charts a day.

9:49
And the more charts that you look at, the faster you’re going to be able to process what you see on those charts as time goes along.

9:55
But I definitely wouldn’t try to take shortcuts at this point and and avoid looking at the charts. I think even more so at a young age.

10:03
If you’re in your 20s or or even just starting off, maybe you’re starting off trading right now and you’re in your 50s.

10:09
But especially if you’re in your 20s, get the charts in front of you. Look at the charts, look at different periods of time.

10:17
You had a big market pull back in 2022. Look at how the market behaved in 2022.

10:23
How did the stocks behave? Was there any sectors that moved higher when the market was trending lower in 2022?

10:29
I can tell you right off the bat, I think energy was like up 40% + 40% that year. I want to say 46%, but I don’t want to be too cocky and actually be that spot on.

10:39
But but I, I’m, I’m pretty sure was like over 40% in 2022. Energy ran contrary to the overall market.

10:48
Learn those kinds of things about the market, learn the nuances because there’s always these caveats with the S&P 500 and what all the corresponding sectors and industries are doing.

10:58
Even in a bad market, there’s usually good sectors or good industries. And so look at those things, look at the nuances on the charts and learn.

11:05
I think even more important is to be a history of technical, a student of the history of technical analysis understanding you know what, what the markets were doing.

11:16
When were your main recessions and and how did the markets respond? How much did we sell off duringthe.com bubble?

11:22
NASDAQ dropped 80%. We are way beyond what we saw in terms of, you know, market bubbles in 2000, right now, here in 2025

11:31
and same market bubble attributes right now that we should be concerned with. So keep that in mind.

11:37
Keep that in mind that that we are in a a very interesting period of time and the, and the studies that you do on past bubbles, on past markets, on past bull market specifically can go a long ways in

11:51
helping you understand and how to react to what the market might present to you going forward. So I use a top down trading strategy in my approach.

11:59
I’ve mentioned that one many of times. Otis mentions it here in the e-mail.

12:03
That means that I’m looking at overall market direction to determine which direction I’m going to trade.

12:08
The market’s bullish, I’m going to trade to the long side. If the market’s bearish, that’s going to set me up for short positions.

12:14
Then I want to look at the sectors that are driving the market, and from there I want to look at the industries that are driving the individual sectors.

12:20
Now Otis is asking, well, how? Where do you find out about the sectors?

12:22
Where you find out about the industries? I use TC2000.

12:25
They have a lot of really good tools for that. You can find a link down them in the description for that as well.

12:32
Really good charting software that I use. And the reason for that is because of the sectors and industries.

12:37
I love the fact that I can drill down and see down to the stocks that are within the sectors that are rally and so on.

12:44
A Let’s go back to the industrials. You have like farm equipment like with Caterpillar and John Deere, and you have defense industry,

12:51
you know, like Northrop Grumman, L3 Harris, you have Lockheed Martin. Those are completely different companies.

12:58
You could have something going on that that is creating war tensions overseas that has nothing to do with Caterpillar and John Deere.

13:06
And so the the military defense contractors are going to be rallying while the farm companies aren’t doing nothing because it has nothing to do with them.

13:14
So it’s important to know which industries are driving those sectors higher. So from a sector standpoint, what I’m looking at is there’s eleven of them.

13:23
You have materials, you have communications, you have energy, financials, industrials, technology, staples, real estate, utilities, healthcare, discretionary.

13:36
I don’t think I left any of them out. I think that was all 11 of them, but they all have a sector ETF.

13:41
That’s the easiest way to watch them. TC 2000 also has their own sectors where it’s more all-encompassing, like every single stock within

13:47
every single sector. Whereas these like XLBXLC, XL, E, all of those, those are the sector ETS are going to have maybe

13:56
like anywhere from like 20 to like 60 or 70 stocks in them that, that are being traced. So I think from a convenient standpoint, X, the XLS are pretty, pretty easy to follow from an

14:08
industry standpoint, that’s where it gets a little bit more difficult. TC 2000 has a really good set up there to where you can see the individual industries within that

14:15
sector. They have a, they have a awesome little graph that that you can follow and it, and it, you click on a sector and it pops up all the industries and showing you how they’re, how they’re running and then

14:21
the stocks within those industries. That’s a really cool way to go about it.

14:26
So you have the sectors in the industries.

14:31
That’s how that’s how I go about it. But when it comes to trading, using the XL is probably the easiest way.

14:38
And then just knowing the sectors and the different stocks that are within them. Because even if you can’t track the individual industries as a whole, if you know what stocks are in

14:48
each of the different, like XLBXLC, XL, E and you actually have that list written out, maybe it’s just as simple as just having a list or having multiple watch lists for each of those industries.

14:57
You can create them on, on your own and whatever platform that you’re using.

15:07
So lots of lots of really cool creative ways that you can go about doing that, starting a portfolio. How many, how many stocks did you have?

15:15
This is one of the other questions that Otis asked. I can’t really answer that for you.

15:20
And this is the reason why it really comes down to your tolerance for risk. So if you have $100 in your portfolio, for instance, and we’ll just say 100 because that keeps the

15:33
numbers easy. And you can only do, let’s say you want to put 20% on each position.

15:41
Well, you’re not going to be able to do more than 5 positions. If you can only if you want to do like 10%, then you can do up to 1010 stocks in your portfolio at

15:50
once. So it really comes down to your risk tolerance.

15:54
Your position size should be the based off of what is the, the, the amount that you can trade that won’t affect you emotionally.

16:02
For some people, because they may be trading with millions and millions of dollars. Maybe it’s like 5% or 6%.

16:10
Or it could be that you’re only trade with a few $1000, but you can only do 5 or 6% as well because your emotions can’t handle a bigger position size.

16:18
And the reason why that’s so important is because based off of your emotions, you, you don’t want those, those emotions to impact your trading decisions.

16:29
If you’re trading too big of a position size, if you’re trading 30% and your emotions dictate, hey, maybe you can only handle like 15%, Your, your, your judgement.

16:40
It’s going to cause you to get out of stock sooner than you should stay in them longer than you should.

16:44
You, you’ve got to make sure that you have that, that position size right up to the threshold of where you can handle the, the, the, the risk aspects of trading where your emotions are not going to

16:56
be impacted by your trading decisions. And so when you find that and it takes a little bit of experimenting, it takes being honest with

17:02
yourself because there’s a lot of times people are saying, well, I want to make X amount of dollars every time I trade.

17:07
So I want to put this amount of money on all my trades. But emotionally you’re not capable of doing that.

17:13
You have to reduce it. It doesn’t matter what you want to make out of out of each one of your trades.

17:17
The market doesn’t care about that. And a lot of people base their position sizes based off of what they want to gain from the market.

17:25
And the reality is, is they’re setting themselves up for failure because if you go about it that way and you’re trading too big of a position size for your risk tolerance, for your risk profile, you’re

17:37
going to make the worst possible trading decisions out there.

17:45
So you want to find what is the position size that mentally and emotionally I can control and handle.

17:49
So me telling you, hey, how many positions you should start off with it, It’s impossible for me to answer that.

17:53
That’s something that you really have to reflect on and answer for yourself. If you enjoyed this podcast, we’re watching it on YouTube, I’d encourage you to like and subscribe. You’re listening to Spotify, Leave me a five star review.

18:01
I always appreciate those that they do mean the world. Make sure to check out swingtradingthestockmarket.com.

18:06
That is my service that goes alongside of this podcast. It helps support the podcast as well.

18:12
And with that, you’re going to get all of my stock market research each and every day you go to swingtradeinthe-stockmarket.com.

18:18
It’s going to show you that each and every day you’re going to get my daily watchlist of stocks that I’m following.

18:22
That’s going to come from that bullish embarrassed watchlist I mentioned earlier in the show. I send that out at the beginning of each week so that you know what my bullish embarrassed watchlist

18:30
is. And then from there, I curate different trade setups that come from that watchlist.

18:36
And then on top of that, at the end of the day, I do a watchlist review. I send that out in video format along with other videos like the mega cap updates like Tesla and Eli

18:44
Lilly and NVIDIA and Google, Microsoft, all those Apple. On top of that, you’re also going to get stock market updates and video format too.

18:53
So it’s really cool, really good service. I highly encourage you guys check it out and send me your questions ryan@shareplanner.com.

19:00
Believe it or not, and I don’t know if you guys send send me questions here. I got Otis, you know, double dip in here and that’s always a good thing.

19:06
But I’d encourage everybody else to keep sending me questions as well. I do appreciate those.

19:10
And if you ran the show before, write it again, I always like to hear them from people. How you know whatever I said before, how that might have impacted you and what what you might be

19:18
struggling with today. And again, make sure to send me that send submit a five star review.

19:25
Those things help out greatly. Thank you guys and God bless.

19:30
Thanks for listening to my podcast, Swing Trading the Stock market. I’d like to encourage you to join me in the Share Planner Trading Block where I navigate the stock

19:37
market each day with traders from around the world. With your membership, you will get a seven day trial and access to my trading room including alerts

19:45
via text, e-mail and WhatsApp. So go ahead, sign up by going to www.shareplanner.com/trading-block.

19:51
That’s www.shareplanner.com/trading-block and follow me on Share Planners Twitter, Instagram and Facebook where I provide unique market and trading information every day.

20:03
If you have any questions, please feel free to e-mail me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.