When it comes to becoming a strong, well-educated trader, there are a number of different tools and pieces of technology you must become familiar with. While some of these tools, such as scanners and advanced charting applications, are certainly helpful, they are often quite costly and designed more so for seasoned day traders who are making enough to easily mitigate their steep costs. As a beginner however, there are a number of far more common tools that are not only simpler, and far easier to use, but they are generally free and provide a vital service for traders no matter their experience level. One of the most common of such tools has got to be the watchlist. A watchlist isn’t just common, its something that is essential to trading, and something nearly every single trader has.
What is a Watchlist?
Fairly simple, a watchlist is exactly what its name implies – it is a list of stocks that you choose to monitor, as you plan on potentially trading them in the near to distant future. Using your watchlist, over time you analyze price movements and identify different points at which you might choose to buy or sell them.
Learning from a Watchlist
Whether you are a day trader or long-term investor, a watchlist is generally a vital part of your stock arsenal. Your watchlist might include a few securities, a few dozen, or even hundreds. The watchlist essentially allows you to track changes in prices, and certain analytical factors over time. Generally, as a trader, you might add a security to your watchlist, as you wait for a certain point to be met – this could be a price, a certain volume, a low point or high point, or other criteria, at which you might choose to buy or sell a security.
Using Your Watchlist
The watchlist can be used for whatever a trader really sees fit, and they can be found in many different places – from your brokerages mobile or desktop app/website, different financial news sites you might have accounts with, and more. in many cases, if you are interesting in purchasing certain stocks within an industry, that might currently be way overpriced due to some trending articles in the news, you might want to use it to track these stocks and see when these prices drop to a more manageable number. Also, some more advanced watchlists, allow you track multiple valuation measures and create a ratio between things like price versus earnings or PE, price versus sales, and more.
For more information on all you need to know about your watchlists and more, be sure to checkout the rest of the Stockia.io Education section.