How to Build a Day Trading Watchlist
P R E S E N T E D B Y :
Andrew Aziz
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Overview
• Stock in Play
• Morning Routine
• Gapper Scanner
• Price Action & Volume
• Trading Terminal
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Overview
• Risk:Reward: Why is it important
• Risk: Reward Analysis
• Position Sizing
• Risk Analysis and Trade Management
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Stock in Play
• Retail Traders look for stocks in play
• A stock with fresh news
• Earnings reports / warnings/ pre-announcements / surprises
• FDA approvals / disapprovals
• Mergers / acquisitions
• Alliances / partnerships / major product releases
• Major contract wins / losses
• Restructurings / layoffs / management changes
• Stock splits / buybacks / debt offerings
• A stock that is up or down more than
2% before the market Open.
• Higher than normal trading volume
is expected.
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Stock in Play
• What shows market direction? We look at some popular ETFs
S&P500 ETF = SPY Nasdaq 100 Index ETF = QQQ
(Showing overall market = 500 biggest companies) (tracks the first 100 stock in Nasdaq)
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Stock in Play
• Why only Stocks in Play?
• Because they are usually independent of overall market fluctuations
XPEV stock in play S&P500 ETF = SPY (showing overall market= 500 biggest companies)
As you see XPEV is trading independent of overall market (S&P500=SPY)
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Stock in Play
• Do Stocks in Play always move independent of the market?
• Not really. In volatile conditions, stocks in play, may get affected by market too.
Volatile market condition
Note size of candlesticks,
volume
Normal market condition
Note size of candlesticks,
volume
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Morning Routine
1. Pre-market news and daily chart analysis 8:30 am to 9:10 am
2. Reviewing Gappers watchlist and finalizing watchlist 9:10 am to 9:15 am
3. Finding daily levels on watchlist and game plan (if-then statements) 9:15 am to 9:30 am
4. Observing price action at the Open for at least 5 min*. 9:30am to 9:35 am
Market opens 9:30 am EST (New York time zone)
* Note: I emphasize not to trade in first 5 min. But I am working on developing some new strategies after 3-4
min of the Open. It is a work in progress and a learning experience for me. I still recommend waiting for at
least 5 min at the Open (i.e. 9:35 am). Some traders recommend waiting 15 min (until 9:45 am).
I apologize for this hypocrisy in advance if you see me trade in first 5-min!
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Gapper Scanner
Our main method to find stocks
for day trading:
Pre-market Gappers
• Average True Range (ATR) at least 50 cent.
• Premarket volume at least 100,000 sh
• Float: Min 1 shares
• Gap up at least +2% or Gap Down at least -2%
Adding float minimum to “1 share”
will filter and remove ETFs.
Note: you can change these parameters based on your strategy
or market conditions. They are not carved in stone.
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Gapper Scanner
Example of a Morning Routine:
Reviewing Gappers Watchlist
Gapper Scanner November 30, 2022
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Gapper Scanner
How to select from the Gappers Scanner?
• We are looking for (1) good volume and (2)
clean pre-market activity.
What is good volume and clean pre-market
activity? Let’s review some examples
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Price action & Volume
• Good price action pre-market Bad price action pre-market
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Price Action & Volume
• What is a buy Out?
• Confirmed buy out of a another company!
• Price is usually FLAT! With heavy volume in pre-
market (institutional trades in pre-market)
• Sometimes there are “rumors” or unconfirmed
chatter of a buyout at around a price, those are
tradable!
• Usually unconfirmed news have enough range and
volatility in the pre-market, so you can see easily
distinguish them from confirmed news.
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Price Action & Volume
• What is a block trade?
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Price Action & Volume
• We usually do not trade Foreign Companies.
• The gaps are because of exchange rate, and not necessarily news.
• It is difficult to find levels in their daily charts.
Toyota Motors Fiat Chrysler
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Trading Terminal
• What do you do if you don’t have Trade Ideas
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• Now we have identified our watchlist, what is next?
Finding Support & Resistance Levels
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Useful icons
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Trilogy of Trading Success
Technology Strategy Psychology Mentorship
Mondays Tuesdays Wednesdays Thursdays
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Edge of Your
Trading
Technology
Strategy Psychology
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