On this, for me it ultimately depends on a few factors:
1. Which are the higher ADR% stocks? Ceteris paribus if all show volatility contraction on volume dry up, a higher ADR% stock will give me better risk reward from the get-go when it moves in the direction of my favor. A lower ADR% stock will naturally take more time - for a smaller account size (<1mm), I want to make sure that the ‘small account edge’ is being exploited as much as possible!
2. I would prefer a stock whose group look to be setup together. Whilst you want a stock to move in the direction of the market, explosive moves also come when the group is moving together.
3. Closely linking to point 2. - is there a thematic driver/story behind the move? If the stock belongs to that, it gives me more conviction to choose that over another.
Inevitably there will be situations where the market heats up and you’ll have many stocks to choose from, that’s a good thing (because it also probably means you can throw a dart, and make money in that environment). It will then come down to experience, intuition, and discretion to narrow the list down to at the very maximum 20 names. Then set alerts and take the setups in the order of the alerts going off.
Lastly, you will inevitably miss stocks that make big moves, sometimes just got to learn to let it go and make sure you follow up by studying why that particular stock made a big move. Over time you’ll get better at it and nail the leading issues of the day!
On watchlist creation, I'd like to know how to reduce that list into 5, 10, 20 names only. If I go through 800 charts on a weekly basis, I for sure will have a much bigger watchlist of continuation breakouts looking peomision. So, 1) what criteria do you apply to decide the most interesting ones? Just the best looking charts, those whose contraction allow for a lower risk entry, or do you use any fundamental criteria? And 2), once reduced, where do the rest of promising stocks go? Don't you follow up them, specially to refill me main focus list as they breakout (either up or down, just the entry moment happened already)?
Absolutedly great stack
Thank you! Appreciate the compliments!
Hey Roman! Thanks for reading!
On this, for me it ultimately depends on a few factors:
1. Which are the higher ADR% stocks? Ceteris paribus if all show volatility contraction on volume dry up, a higher ADR% stock will give me better risk reward from the get-go when it moves in the direction of my favor. A lower ADR% stock will naturally take more time - for a smaller account size (<1mm), I want to make sure that the ‘small account edge’ is being exploited as much as possible!
2. I would prefer a stock whose group look to be setup together. Whilst you want a stock to move in the direction of the market, explosive moves also come when the group is moving together.
3. Closely linking to point 2. - is there a thematic driver/story behind the move? If the stock belongs to that, it gives me more conviction to choose that over another.
Inevitably there will be situations where the market heats up and you’ll have many stocks to choose from, that’s a good thing (because it also probably means you can throw a dart, and make money in that environment). It will then come down to experience, intuition, and discretion to narrow the list down to at the very maximum 20 names. Then set alerts and take the setups in the order of the alerts going off.
Lastly, you will inevitably miss stocks that make big moves, sometimes just got to learn to let it go and make sure you follow up by studying why that particular stock made a big move. Over time you’ll get better at it and nail the leading issues of the day!
On watchlist creation, I'd like to know how to reduce that list into 5, 10, 20 names only. If I go through 800 charts on a weekly basis, I for sure will have a much bigger watchlist of continuation breakouts looking peomision. So, 1) what criteria do you apply to decide the most interesting ones? Just the best looking charts, those whose contraction allow for a lower risk entry, or do you use any fundamental criteria? And 2), once reduced, where do the rest of promising stocks go? Don't you follow up them, specially to refill me main focus list as they breakout (either up or down, just the entry moment happened already)?
Thanks for you insights!