Keeping a stock watch list can be a critical for a trader. There are many different reasons why that statement is true.
First things first, what exactly is a stock watch list? This is a list of stocks that you feel are good strong companies for whatever reason. It may be that these companies have strong earnings and the company itself is a good investment. It could also be because the company is in a strong bullish trend and is likely to keep going up as long as buying pressure stays.
The idea behind keeping a watch list is that you are able to follow these stocks and buy when they give off a good technical signal. In this case you would have the best of both worlds, a fundamentally strong company with a great technical analysis entry.
Another reason why someone would want to keep a watch list is because it is easy. It is far easier to keep a watch list and check it every day then to go out and look for new stocks every single day that just gave off a buy signal. Even more than that, it is harder to look up any fundamentals, if you are so inclined, on all stocks that give off technical signals.
The third and final reason why it is important to develop a watch list is that if you keep trading a few stocks you will learn the patterns of those stocks. Yes, all stocks follow the rules of technical analysis but they all follow them in their own way. The long you trade a given stock the better you will get better at predicting how that given stock acts and you will get better at trading it. The better you trade it the higher returns you can make, which is always good.
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