Anarco ask the following question(s) in the comments and I feel it is a very common question:
I typically start my morning with my WL and a few other stocks (gapers, earning stocks, etc) and as I go through the charts, I keep narrowing down the ones I want to focus on. But many times I find myself not making the most optimal selection and, of course, I realize that after I am already in the trade. So my question is: do you feel that making “good picks” is simply a matter of gaining more experience? Or do you feel there are other factors to consider? For example, do you find that the action in the daily chart (previous day/s action) is a deciding factor?
Anarco, your question is one that I ask myself and worked on for a long time (and continue to ponder at times). So, I was writing an additional response (after Jamie's response in the comments) and it got so long I decided to post it. I hope you don't mind. As Jamie said, experience is a key factor. Additionally, the following observations may help.
1) When I use a non-dynamic WL (not tweaked day-by-day) I typically focus only on the top & bottom ~10% based on %change (per Jamie's recommendation). Example: For a WL of 50 stocks, I will only focus on and trade the top & bottom ~5 sorted by %change for any given day. Of course the stocks that appear in the top/bottom will change or rotate day-by-day. Using this approach alone (without pre-market planning), I find good trades but my confidence tends to be a little lower and I am slower to initiate.
2) Pre-market analysis of the daily charts from my WL stocks will add some confidence. Example: Suppose I have noted 2 days of range contraction in stock Z. If stock Z happen to show up in the top/bottom %changers, I am ready and more aggressive in initiating a trade.
3) Pre-market analysis and day-by-day tweaking of a WL (based on EOD scans, etc.) can also improve confidence and increase the number of good setups in your WL. However, often what I predict should move, does not; and what I don't expect to move, does.
4) A
TraderX like method is to build your entire WL from gaps or other highly active scans just after the open. This is fruitful but can lead to trades in stocks that are not familiar.
5) What I have been doing of late is a hybrid method. I keep a very small core WL. I add to this using scans for gaps and highly actives during the first 15mins. From the scans, I tend to select stocks that I recognize or have traded before.
Today I had a WL of less than 25 that included: CLF, X, NKE, SOHU
Notice that
Jamie traded X, NKE and SOHU today. My focus was on CLF (top of my %changers) and SOHU (bottom of my %changers). The result on a choppy day was two great long trades in CLF and a short trade in SOHU. I'll bet you can pick out the two longs in CLF and Jamie posted the short in SOHU.
So, shift your focus to the extremes of your WL - it makes a lot of difference!
A mixed start on Tuesday with choppy base building persisting well into the afternoon before a late day run to fresh new 52-wk and recovery highs. Thus Monday's retest of the base was successful and we rally on. The lack of volume implies few bears ie. no short squeezes as the bulls party on.
PRGO opened with a wide gap and immediately took out the ORH. Volume = momentum on these wide gaps and since PRGO's volume is strong, we want to get in.
Since there's no identifiable chart pattern, move from 15 min. to 5 minute timeframe to find a suitable entry point. Price consolidated in a narrow range close to 5 EMA so I entered long. Place Fibs. from previous day - late day lows ie. beginning of last leg up - to ORH and target a Trader-X style extension.
As long as the stock continues to carve out higher highs and higher lows, we can be hopeful of further extensions. After exiting the initial trade, we wait to see how price consolidates. Price consolidates in a narrow range on low volume (price/volume contraction ahead of expansion).
