In my daily group coaching class and one-on-one coaching sessions, I frequently talk about the need for a trading watchlist. I have two active watchlists: one for underlyings I always look at (which I am talking about here) and another to actually know when to take the trade. Without either one, I believe many traders are just searching aimlessly for opportunities. So many option traders I work with ask me how to find the best opportunities. Having a watchlist that is fluid gives you the best chance to do so, in my opinion.

Finding Opportunities

There are so many different scans and services at a trader’s disposal it could make your head spin. The thought of having the best candidates at your fingertips can be quite exciting, but it can be a little overwhelming too. Now by no means do I mean you should never use them because I use a couple myself. But truth be told, probably 75% to 80% of my option trades come from a small list I have used for quite some time now.

I have found if I keep a list of about 15 to 30 stocks, I can recognize opportunities where I put the odds on my side easier. Instead of looking everywhere, I can hone in and have better results. Some of the stocks that make up my personal watchlist are Tesla (TSLA), Apple (AAPL), Amazon (AMZN) and Facebook (FB), just to name a few.

Keep It Active

Of course, that does not mean I cannot take or find a trade outside my watchlist. I just need to be careful to not let the list grow so big that I cannot track all the potential opportunities. Hence the need to keep it very fluid by adding/subtracting symbols when need be.

Patience

Being fluid also means being patient. There will not always be a great opportunity every single day from your watchlist. But many more times there will be. The key is to keep the list active and strike when the opportunity presents itself.

John Kmiecik, Market Taker Mentoring