How To Build a Stock Watchlist

The National Association of Securities Dealers Automated Quotations (NASDAQ) and the New York Stock Exchange (NYSE) are the two major exchanges in the United States. According to Statista, the NYSE lists the shares of 1,980 US-based public companies. The Nasdaq lists 2,918 — and that’s just domestic stocks. Together, both exchanges also list more than 1,400 international companies.

The point is, there’s a great stock market out there, and that’s one of the reasons so many financial advisors advise their clients not to try to pick stocks. It’s likely that many of these advisors caution against stock picking, assuming their clients won’t base their picks on strategically curated watch lists.

However, taking the time to create and monitor a stock watch list can increase your chances of picking winners and avoiding losers while taking the guesswork out of stock investing.

What is a stock watch list?

A stock watch list is a collection of securities that investors create and monitor to help them make successful investment decisions. They don’t necessarily buy the stocks on the watch list — although they might — they just separate them from the larger group to keep track of their performance.

A stock watch list can help you reduce the thousands of stocks tumbling the market down to a manageable list of potential investments that meet the criteria of your specific investment strategy. You can also use a stock watch list to monitor the performance of specific stocks that you already own in your investment portfolio.

Which stocks should I put on my watch list?

Investors create watch lists based on their own investment styles, goals and game plans.

For example, some people only invest in the so-called Dividend Aristocrats, which are a collection of S&P 500 stocks that have increased their dividends every year for at least 25 straight years. They are attractive because they are large, well-established and extremely stable companies with tremendous liquidity and a track record of surviving market downturns and economic turmoil.

Currently there are 65.

An aristocrat investor could create a stock watch list that includes only the 65 dividend aristocrats to isolate them from the 4,000+ options available. But 65 is still too broad a pool for investors looking for just a select few stocks that fit their criteria.

Here are some examples of how aristocrat investors might use a watch list to identify the right choice or two from 65 potential picks:

• A value investor might watch the 65 stocks on the watch list, waiting for a stock’s price to fall, perhaps during a temporary pullback following a poor earnings report.
• An income investor might watch the 65 aristocrats and pounce on one as it increases its dividend.
• A fractional stock investor could own shares of all 65 and watch the watch list to know when to sell one that cuts its dividend.

That’s just one example of how three different investors interested in the same group of stocks could create three different watchlists based on three different strategies.

What does it mean when a stock is on the watchlist?

When a stock makes it onto an investor’s watchlist, it means the investor has decided the stock is worth keeping an eye on because it looks like it will fit into their plan. Investors put stocks on their lists because they believe they have the potential to become worthwhile investments if they respond to a catalyst.

The following is a look at what some of these catalysts are and what some of these reactions might be in various watch lists.

How do I create a stock watch list?

When deciding how to create your stock watch list, you want to find a balance between too many and too few. If your watch list includes too many stocks, your list will become too broad and cluttered to be effective. If it’s too few, exclude stocks that might match your criteria.

Your criteria could be:

• Stocks with the highest percentage change over the previous day, the last five days, or the previous month.
• Stocks with the most dramatic changes in trading volume.
• Alerts like stocks experiencing accelerated average daily volume without much price change.
• Trend patterns like common breakout and breakdown indicators.
• Bullish indicators like hammer candlesticks or transitional indicators like candlestick dojis.
• Stocks with upcoming earnings calls or quarterly reports.
• Stocks that show sustained upside momentum or, for short sellers, downside momentum.
• Changes in analyst ratings.

How do I get a watch list?

If you already have an investment account, chances are your broker has their own native tools that allow you to create watchlists right on the same platform. It’s a convenient way to get started because if you decide to take a step based on the behavior of a stock you’re watching, you can do so quickly without having to switch apps.

In the end, however, the best watchlist is the one that has the tools, features, and look and feel that suits your needs, tastes, and strategy.

There are many platforms where you can create watchlists for free, such as Google Finance and MarketWatch Watchlist. Free platforms usually offer stripped-down versions with basic features like price change trackers.

Other, more sophisticated platforms offer tiered plans that give you higher-tier features with each new pricing package. For example, StockRover offers Free, Essential, Premium, and Premium Plus plans. The most expensive option is for serious traders. It offers 650+ metrics, 10+ years of historical data, and advanced features like ranked screening and rating charts.

Other stock watchlist platforms include:

• Delta investment tracker
• Intuit Mint Investment Tracker
• FinViz stock screener
• Personal capital portfolio analyzer
• equity stat
• Yahoo Finance Portfolio Tracker

Don’t be afraid to build more than one

While you shouldn’t clutter up a watchlist with too many stocks, you can distribute many stocks grouped into several different watchlists — you can create more than one on most platforms.

For example, some investors might use different watchlists to monitor stocks that interest them in different sectors, such as energy, manufacturing, and technology. Others may use multiple lists to monitor stocks with different market caps — perhaps one for small-cap stocks, one for mid-cap stocks, and another for large-cap stocks. For another investor, one watch list might be for domestic stocks and another for international stocks, or one for their short selling prospects and another for stocks they want to buy and hold.

Final recording

A stock watch list isn’t a panacea that makes investing easier, but it can help investors of all experience and skill levels narrow down thousands of available investments to a few that stand out from the crowd. No matter how sophisticated the platform or app you use, stock watchlists only work if you check in with them regularly, monitor their status, and know which changes you will and will not act on.

If you’re new to the game, start with the native watchlist tools your broker offers, then learn as much as you can about other charts, graphs, metrics, and analysis tools that might be worth paying for, if you progress.

If you’ve outgrown your current watch list and are willing to pay for a premium product, start with one that offers a free trial.

Information is correct as of August 26, 2022.