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How do I streamline my watchlist to reduce the number of stocks in it?

Discussion in 'Beginner's Lounge' started by aprilia4life, Oct 8, 2011.

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  1. aprilia4life

    aprilia4life

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    Hi everyone

    I am a paper trading newbie and currently I am trying to trawl through the ASX300 stocks, which i think has a nice coverage, but I am being overwhelmed by looking through 300 stocks and end up frozen by choice. I would prefer spending more time analysing a small watchlist, than not knowing where to look in a list of 300. I am happy to miss some of the moves due to a small watchlist (I will increase the watchlist as my skills improve), but I would prefer to use my growing technical skills to identify key moves in a very small list.

    Where would I start to streamline that list down to much less than 300, and what would be the lowest (practical) number I could go and still catch a few profitable moves?

    Would I use the stocks in the best sectors? Blue Chips? Mid Caps? Small Caps?

    Ideally I would like to have at the most 50, although 20 would be better, 10 would be great. I would prefer spending more time analysing each stock in a list of 20, than a much larger list.

    I have reduced the list of 300 to stocks trading between 0.20c and $5.00, for better percentage growth. If a large list is necessary, what's the best way to filter? I was using Leon Wilson's recommendation of anything with the price closing above the 21 moving average.

    Thanks everyone :)
     
  2. aprilia4life

    aprilia4life

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    Ok, given the lack of replies I might refine my question a bit.

    After having another read through the Daryl Guppy - Share Trading book, it was suggested I choose an index or two to start with and specialise in.

    What are some good starting sectors? I have the S&P stats on sectors and over the past year we have Telecom Svc on top, then Utilities, Cons Staples and Financials.

    Another way I have thought of reducing my number of stocks to analyse, is only going off ASX50, or maybe ASX Mid Cap 50, or even the Small Cap 200. I am currently using Stockwatch.com.au for paper trading, and that has a rough All Ords (a little less than 500 stocks to trade). But 500 is a huge number and too many for me.

    Thanks!
     
  3. tech/a

    tech/a No Ordinary Duck

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    You need an entry criteria to diminish choice.
    Once you have that you'll need an exit criteria
    Once you have that you'll need to understand position sizing
    Once you have that you'll need to understand risk mitigation.
    Once you have that you'll have to find out that when put together over an extended period of time you'll return a profit before you fail to ruin.

    You are at the very beginning of a long journey it will take 5000 to 10000 hrs
    Anything worth while will.
     
  4. Wysiwyg

    Wysiwyg Everyone wants money

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    For trading purposes, your strategy will probably include being able to enter and exit a stock with minimal slippage. Therefore a liquidity filter will help define stocks that have a daily turnover greater than your maximum outlay per trade. So you can use any stock list.

    1 minute learning for free. :)
     
  5. Gringotts Bank

    Gringotts Bank

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    april you haven't mentioned whether you want to analyse stocks technically or fundamnetally or both.

    You will easily narrow your search by adding filters for various FA or TA criteria.
     
  6. aprilia4life

    aprilia4life

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    I have been practising technical analysis, but I can see that fundamental analysis might be useful to narrow down my list. Maybe I could subscribe to a fundamental analysis newsletter and go off that. I don't have to buy the shares straight off the bat, I can do the TA on them and buy when I feel the time is right.
     
  7. tech/a

    tech/a No Ordinary Duck

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    Why?

    What is your current criteria?
    Technically obviously
     
  8. Gringotts Bank

    Gringotts Bank

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    Look at a whole heap of sub $1 charts, and see if you identify and then can write in English what is going on when a stock is just about to go up strongly. Once you have that, someone here will probably be able to write the code for those conditions, narrowing your search.

    eg. stocks that seem to consolidate after a big rise, within a narrow range - this can easily be coded for.
     
  9. bailx

    bailx

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    I have reduced the list of 300 to stocks trading between 0.20c and $5.00, for better percentage growth. If a large list is necessary, what's the best way to filter? I was using Leon Wilson's recommendation of anything with the price closing above the 21 moving average.

    May I suggest that it is important to keep it realistic.keep the mumbo Jumbo out your only confusing yourself and making things more complicated. That is why I agree with keeping only what you can afford,to get most out of stock and its trade. Better value for the dollar. Instead of just closing above a 21 Day MA, why not do one better and go for a 50 Day MA or even a 200 Day MA. Perhaps organize your watch-list in this manner to co-inside with your TA and see how they perform.
     
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