The Importance of a Stock Market Watch List cannot be over-estimated. It’s hard to stay oriented without one. And that’s why using a watch list to manage your stock market portfolio and potential investing opportunities is a winning strategy used by successful stock traders and investors everywhere.
In this blog post we’ll look at why a stock market watch list is so important. I’ll also share some ideas you can use to build your own stock market watch list. This way, you’ll be able to track opportunities and strike when the time is right.
Now on that note…
Let’s get into the benefits of a stock market watch list:
Why a Stock Market Watch List Can Improve Your P&L:
The reason you’re probably interested in a stock market watch list is because it can improve your profit and loss statements. In fact, in my experience, using a stock market watch list is truly the best way to consistently stack the deck in your favour.
Just think about it…
When you build, maintain and regularly update your stock market watch list, it’s like you have a dashboard of all the best trading or investing opportunities right in front of you.
Using a stock market watch list lets you be proactive. It lets you make a trading plan and be ready to exploit investing opportunities just when the time is right. And it puts you back in the driver’s seat.
Without a stock market watch list you’ll always be on your heels reacting to the latest financial news headline. On the other hand…
When you use a stock market watch list effectively you can start investing on your own terms and being proactive about where you choose to place your capital. A watch list makes sense for a lot of reasons.
But we haven’t even mentioned the best part about stock market watch lists…
The Best Part of Stock Market Watch Lists:
The best aspect of using a stock market watch list is that there isn’t really one single best practice version of stock market watch lists you should refer to.
You can build a customized and totally personalized stock market watch list that shares the information you need most. That way, you only get the important facts – and you can see everything with one quick glance. Sounds pretty good, right?
What you include in your spreadsheet will primarily be a matter of whether you are a short-term trader or a longer term investor. If you’re a trader looking to track technical patterns then your stock market watch list will have a lot more information about price trend, volume and relative strength.
Whereas, if you’re a longer term investor looking for buy and hold opportunities your stock market watch list will contain fundamental measures and valuation metrics to help you compare different investing opportunities.
The beauty of a stock market watch list is that you can choose what to include. The only important thing is that it reflects your trading or investing style and allows you to compare different stock ideas against the same criteria.
Getting started making your stock market watch list is really easy. All you have to do is it fire up your favourite spreadsheet program (be it Microsoft Excel, Apple Numbers or Google Spreadsheets). And then create a table to compare your favourite stock market characteristics. For example…
Here’s a screenshot of one of my stock market watch lists:
As you can see from my stock market watch list above, things don’t have to be that complicated. The left hand side contains information on the name and ticker of the company. Then I look at the current price, my ideal entry and a target price based on intrinsic value calculations. The rest of the spreadsheet is just about other fundamental criteria that I want to keep an eye on.
But do you know what the most important part of this stock market watch list is?
One Take Home Point for Building a Stock Market Watch List:
One of the things I find most useful about the stock market watch list example shared above is the ability to rank stocks based on their potential percentage gain (column G). Why is that so important?
When you catalogue your stock ideas and use objective measures to determine entry and exit targets then you can also get a critical look at your potential percentage gain if the trade goes right. By ranking your stocks based on profit potential you get valuable perspective on where you should put your money.
This approach works for both fundamental investors and technical traders. The only difference will be the factors that help you determine your price target and entry price. But at the end of the day…
When you can clearly see where your money can be earning the highest return it really helps you improve your portfolio returns. This way you’re focused on the highest profit opportunities, rather than the exciting news headline of the day or a recommendation from a broker or Twitter follower. Make sense?
And By The Way: Using a stock market watch list is just one of the tips I recommend to help you make the most out of your stock market investing. If you want more free tools and resources I encourage you to sign up for updates below. You’ll also get a copy of my free value investing/swing trading ebook. Check it out for free below!