What Is a Watchlist?
Let me tell you directly: a watchlist is simply a set of securities that you, as an investor, keep an eye on for potential trading or investing chances.
You'll find that many brokerage and financial platforms make it straightforward to build and view these watchlists. If you organize yours well, it can help you spot trading opportunities, track how your portfolio is performing, or keep tabs on stocks that are currently hot or popular.
Key Takeaways
Think of a watchlist as an inventory of ticker symbols you're monitoring for opportunities or to track performance. Most online brokerages and financial portals let you construct them easily. Some platforms even provide curated watchlists based on criteria their experts think matter to users.
You can use a stock screener to build an automated watchlist focused on metrics like earnings or long-term performance. These lists can be managed actively with regular checks or just viewed passively over time.
Understanding Watchlists
A watchlist is exactly what it sounds like—a list of stocks you watch closely, ready to act if prices drop to create an undervalued situation. This goes beyond just following stocks; these are ones you'd buy and hold at the right price or with the right trigger, like a sign of renewed growth.
As an investor or trader, you might build a watchlist with several, dozens, or even hundreds of instruments to make better decisions. It keeps you informed on company news or other events that could affect them.
You typically monitor the list for specific criteria, such as high trading volume, breaking a 52-week range, or moving above the 200-day moving average, before you place any orders.
Types of Watchlists
Most trading platforms let you create your own watchlists for the securities that interest you. Take Fidelity, for example—it's a major platform that allows up to fifteen watchlists, each with 50 symbols. You can set them up for alerts on trading signals like sudden price shifts.
You could organize separate lists for stocks, bonds, mutual funds, or other assets. Watchlists also apply to cryptocurrency trading, where quick price swings might offer profit chances. For cryptos, you might track tokens with upcoming forks or mainnet launches, beyond just trading metrics.
When to Use a Watchlist
Suppose you're eyeing stocks in a specific sector, but it's overvalued overall, with few attractively priced options. You could create a watchlist of all stocks in that sector, tracking valuation measures like trailing price-to-earnings, price-to-sales, and price-to-book ratios.
When a stock hits your criterion, say a PE ratio under 15, it becomes a candidate for investment. Many websites and brokerages let you build these watchlists for free. If you want to track securities, just set one up on your brokerage platform.
Warning
Be cautious: many new investors try to track too many stocks, but a watchlist with hundreds of entries is too broad for anyone to handle effectively. Don't attempt to monitor everything at once.
Special Considerations
Generally, brokerage watchlists handle 25 to 75 names, depending on your screen setup with charts, scanners, and news. A list of 200 stocks is usually too much for any investor to monitor properly. Refresh your list at least a couple of times a month—it's meant to be stocks you're waiting to buy when they get cheap enough.
Dedicate one screen to your watchlist tickers, showing just essentials like last price, net change, and percentage change. Some traders link a single chart for quick price pattern reviews during the day.
Example of a Watchlist
For real examples, check Yahoo! Finance—they offer curated watchlists like 'Most Active Penny Stocks' and 'Most Shorted Stocks.' These update automatically, so you don't have to manually adjust stocks that no longer fit.
The Bottom Line
Watchlists are a straightforward way for you to track the market for signals and opportunities. Tools abound for creating your own or following curated ones. By focusing on key securities, you can concentrate on what matters to you.
How Do You Create a Stock Watchlist?
Most platforms let you create watchlists to track interesting securities. Start by defining your investment criteria and what you're seeking. Then use a stock screener to find matches and add them.
What Is a Good Stock Watchlist Tool?
Paid products like Worden’s TC2000, Wealth Lab, and Trade Ideas offer versatile tools with large databases. Free options from Fidelity or Robinhood allow watchlist creation, though with fewer metrics. Sites like Marketwatch and TradingView provide free watchlists and screeners too.
What Is a Curated Stock Watchlist?
It's a watchlist made by a broker or platform for clients, with automatic updates so you don't manage additions or removals.
Important
This information isn't tax, investment, or financial advice. It's general and doesn't consider your objectives, risk tolerance, or circumstances. Investing risks loss of principal.
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