As the holidays approach here in the States, we're bombarded with Christmas music. This can be annoying, but Christmas songs can actually serve as helpful reminders for our trading.
Like Santa making lists of naughty and nice, us traders often make lists of stocks we are interested in. Day traders prepare before the markets open, looking for stocks that they anticipate big moves from, and swing traders build lists of stocks they feel will profit in the short term.
Sometimes we get carried away with these lists, though. I've seen many day traders create a pre-market list with dozens of names that are hinting at a big move. Eventually the markets open and they are left with a large list of stocks moving all over the place, which makes it hard to concentrate. And plenty of swing traders build a great list of stocks and fall in love with each of them, though they are only looking for a trade or two. They can't choose them all, but every name on their list seems close to an entry point and they don't want to miss anything!
Well, like the song "Santa Claus is Coming to Town" goes, "He's making a list, and checking it twice." We too can check our lists a second time for the sake of refinement.
When you create a list, there are many reasons you add a stock. Maybe it's a gapping stock, or a stock you feel will break out soon. Either way, you have a strategy for finding these names to add to the list. What I am suggesting is that you have a strategy that ranks the interest level of these stocks.
Find reasons to move certain names to the top of your list so it becomes more focused. Maybe you have a breakout list full of stocks that are close to breaking out. Upon a second check, you notice that a few are still 3 or 4% away from breaking out and the average daily range is only 1%. On the other hand you have names that are 2% from breaking out and show that they can move that much in a day, so those could go towards the top.
Don't let lists get out of control. Like the fat man in the red suit has to do, focus in on your list and refine it so you never miss another profitable entry.
