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)?
Hey Sai! Appreciate the kind words! One way to approach it is to look for a themed ETF and search up it's top holdings. The other creative way is to make use of AI tools to give you a list!
Hi @clementang17, this is a very thought provoking knowledge sharing. Thanks for putting it together to benefit the community.
A couple of follow-up questions:
(1) what timeframe do you use for your analysis (while building the watchlist) and actual trade execution?
(2) You mentioned about 10/20 EMA, 50 SMA and 200 MA (is this SMA or EMA)? You also mentioned about 5MA (is it SMA or EMA?) My question is what MAs do you use in respect of timeframes for your analysis (while building the watchlist) and actual trade execution.
(1) My main frame of references are definitely the daily and weekly chart, I then go down to the 30-min / 5-min for execution - you don't necessarily need to use intraday timeframes to time it. Imo the daily timeframe will suffice (that's how I did it in 2024)
(2) I use the 10 and 20 EMA, and the 50 and 200 SMA (and the 5 SMA too). SMA or EMA doesn't really matter, what matters is how you make it work for you.
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!
Absolutedly great stack
Thank you! Appreciate the compliments!
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!
This is such an awesome post. Thank you.
How do we create a list of the Thematic stocks, Where do we get the list from?
Thank you.
Glad you found it helpful, Sai.
You should create your own thematic watchlists. This older stack contains a few links you may find helpful: https://tradingresourcehub.substack.com/i/144847306/building-watchlists
Hey Sai! Appreciate the kind words! One way to approach it is to look for a themed ETF and search up it's top holdings. The other creative way is to make use of AI tools to give you a list!
Thanks
Love you
Hi Clement Ang, Great write up and very helpful.
Whats your critera for this scan.
A combined scan of the top price gainers on one-month, three-month and six-month time frames.
How much of price gain do you use?
Hey Naga! I utilized the 'absolute strength' ranking on a 1, 3 and 6-month time horizon to filter for these top price gainers (on Deepvue)
Thank you for the quick reply..
I also use Deepvue for my screeing, Do you use their preset screen of "Relative strength new high 1,3 and 6 months"?
I am not seeing any Absolute ranking
Hi @clementang17, this is a very thought provoking knowledge sharing. Thanks for putting it together to benefit the community.
A couple of follow-up questions:
(1) what timeframe do you use for your analysis (while building the watchlist) and actual trade execution?
(2) You mentioned about 10/20 EMA, 50 SMA and 200 MA (is this SMA or EMA)? You also mentioned about 5MA (is it SMA or EMA?) My question is what MAs do you use in respect of timeframes for your analysis (while building the watchlist) and actual trade execution.
Thank you.
Hey there!
(1) My main frame of references are definitely the daily and weekly chart, I then go down to the 30-min / 5-min for execution - you don't necessarily need to use intraday timeframes to time it. Imo the daily timeframe will suffice (that's how I did it in 2024)
(2) I use the 10 and 20 EMA, and the 50 and 200 SMA (and the 5 SMA too). SMA or EMA doesn't really matter, what matters is how you make it work for you.
Thank you for your prompt response. It's well appreciated.