Stock Trading Picks: Set Watchlist or Dynamic List?

There is an ongoing battle in my family every time we go out to eat. I usually want to try someplace new, but my wife insists on going to our favorite restaurant where she knows exactly what she’ll get. So in order to maintain domestic bliss—for over 20 years now—we compromise. Sometimes we try new stuff, and sometimes we go with the tried and true.

In trading, you have a similar choice in how you approach your stock selection process. Some traders are open to new ideas, willing to trade anything intraday that meets their criteria. Others work from a set list and don’t deviate from it.

Where’s Your Head?

Each approach has its pros and cons, and deciding which one is best for you depends on your mindset.

If the information overload of the market tends to cause you to lose focus, working off a set list of stocks may be your best option. Every stock has its own unique trading personality, and by continually trading the same tickers, you’re more likely to become intimately aware of those personality quirks and can potentially use them to your advantage.

And since you always know which stocks you’ll be watching during the day, you can do a lot of your analysis in aftermarket hours, when there is no market noise to distract you.

The disadvantage to this approach is that on some days your stocks will not present any viable setups and you’ll have to sit on your hands—which isn’t the worst thing in the world.

For those who like a more active, open approach to stock selection, keeping your trading possibilities open during the day might be a better alternative.

This may require you to watch several lists and have real-time screeners and alerts set up in advance to constantly bring you a stream of potential trade candidates. This approach can be frenetic at times, but it helps ensure that you’ll always have a chance at the hot stocks of the day.

The major drawback with this approach is that if you aren’t careful, you may find yourself chasing after everything that moves, which can lead to poor trade selection and overtrading.

Try Both? You Bet

There is no right or wrong method—just what works best for you personally. And not unlike our approach to dining, some traders find a bit of a compromise works for them.

One suggestion: consider starting with a fixed list of stocks but supplementing it with active movers. The key is to create the right balance between the stocks that you are comfortable trading on a regular basis and those that you think may present the best ad hoc opportunities during the trading day.

But whatever you do, don’t get sucked into believing any preconceived ideas about these two approaches. One may seem “boring” and the other “wild,” but ultimately the best approach for you is the one that is the most profitable.