Tips on Building a Day Trading Watchlist

As day traders, we seek stocks that are highly volatile and likely to give us enough movement during the intraday to capture profits while minimizing risks. Most traders have a watchlist they build either during pre-market hours or even after the previous day’s market close. While everyone has their own custom criteria for building their watchlist, we’ve put together some basic guidelines to help you get started on your own.


When a symbol has a relatively large price gap between its close price on the previous trading day and its open price the next day, it will provide trading opportunities. These symbols often produce violent movement after the opening bell. Sometimes they end up trending, sometimes they consolidate. Either way, these gapping stocks should be studied and reviewed for watchlist potential. One can google terms like “biggest pre-market movers” and the like to find free resources that list gappers, or you can configure your scanners to identify them. One word of caution: sometimes these gaps are caused by buyouts. If so, chances are slim that the price action will move enough to take any trades. You can look up news on the symbols to verify this. You can generally identify them by their flat-line price action.


Major news stories pertaining to a publicly traded company will of course affect the price of its stock. A news story of great importance can drive a major move in a ticker and provide an excellent opportunity to capitalize on that move. Some examples of such stories include: a tech company announcing a data leak or a breach or privacy, a pharmaceutical company announcing promising results on a new drug trial or FDA approval, a company undergoing FCC or IRS investigation with rumors of fraudulent activity, etc. Be cautious when choosing a direction to take on these stories, as the market/price action isn’t by any means required to move in the direction that a news story would lead you to believe. Quarterly earnings reports can also have a major impact on short-term volatility, and it’s therefore a good idea to have a bookmark to a page or website that has an earnings report calendar.

Relative Volume

Gapping stock prices are often indicative of a news story, earnings report, or other catalyst. Another important factor in adding a ticker to your daily watchlist is volume. Stock prices need an extraordinary amount of volume compared to its average to make extraordinary movement in price. Nearly all scanners include relative volume as a search criteria option. As a day trader, you’re generally looking for a relative volume score of at least 2-3 (200%-300%) to add a name to your watchlist. Without ample volume, there’s a strong possibility that the majority of the move is done already, or that there won’t be one at all.

We hope these basic guidelines for criteria help you get started building your own watchlist. As you trade, you will customize and mold your watchlist and preferences to your particular style of trading. Until next time, stay classy San-Diego!

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