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THIS is where most traders go wrong…

Do you know how to extend your trading life beyond the big four?

Meaning beyond the S&P, NASDAQ, Dow, and the Russell.

There’s more to trading than just these four.

So let’s discuss how to build a watchlist outside of these names, that way you can continue to broaden your horizons…

STEP ONE: Where Mistakes Begin

The reason I really want to harp on this is because it’s been difficult to trade right now, not because of the weakness, but because of the abnormal volatility, Gang.

And my analysis has shown me that most trading mistakes begin at the watchlist building level.

How so?

When looking for buys in downtrends, or when looking for shorts in uptrends.

So what’s the possible solution?

Using relative performance to pick the best names to buy. Then on the reverse side, the strongest and the best names to short (a.k.a. the weakest). That’s already going to put a lot in your favor when looking for trends specifically.

“But Ragh… where do you find relative performance?”

STEP TWO: Using Relative Performance to Build A Watchlist

Now this is totally unsolicited — I don’t know them, but I love their website, Gang.

Check out www.finviz.com.

It’s a free resource that updates daily to show you the relative performance on a wide variety of markets and a wide variety of time frames. For my purposes, I’m going to be referring to the section on their website that’s specifically for the Futures performance for one month.

Now, if you want to go back a quarter that’s fine — it’s really up to your preference. But generally for daily time frame setups, I’ll typically look at the one month.

So with that in mind… let’s build a watchlist.

STEP THREE: Long Gold and the 30-Year Bond, Short Natural Gas, And More

What am I still interested in?

Well as I’ve discussed for several weeks now, I still have an open long position in Gold, and I’m still watching the 30-year Bond. But who else am I bullish?

I’m looking at Reformulated Gasoline Blendstock for Oxygen Blending (a.k.a. RBOB Gasoline) optimistically and Crude Oil as well. I’d say I’m more optimistic with RBOB, however.

But a watchlist isn’t always just built with bullish, long positions. We’re also okay with shorts, Gang.

So using that awesome tool on www.finviz.com we can scroll to the bottom and notice those names near the bottom of the page… like Natural Gas, Soybeans, and Cattle.

We’ve actually been short Natural Gas for awhile now, and in fact recently we took profits on that trade in our Futures Room. But there’s still really good opportunities to short there.

And as a parting thought, don’t forget about coronavirus, and possibly look to trade some of those country ETFs we talked about not too long ago. Maybe even Taiwan’s ETF now.

1 thought on “THIS is where most traders go wrong…”

  1. Raghee, when building a watch list – are we looking for the fastest movers? or those
    with the greatest drops?, etc. // knowing that a reversal is coming, just a matter of when. Thanks for all of your help, both you and John inspire confidence through your webinars.

    Reply

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