Page 434 - THE MARKET WHISPERER

430 PART 12 - Choosing a Winner Stock

Every so often, the main list should be checked and updated according
to the three follow-up divisions. List the stocks you plan to trade over
the current day in a separate table, including organized columns for the

trigger point (entry price), stop loss point, first profit target (the partial),

and final profit target.

SMART Prepare a follow-up list of 100 stocks sorted into three
MONEY categories: hot stocks, rising stocks and falling stocks.
Frequently update the lists and mark stocks suitable for
trading.

How should you construct your follow-up list? I recommend beginning
with a list of up to 100 stocks, and expanding it over time as you gain

experience. You can choose leading stocks from two important lists: the
NASDAQ 100 and the S&P 500. Note that some NASDAQ stocks will also

appear on the S&P list. To find the symbols for stocks in each of these two
lists, Google the words “NASDAQ 100 index” and “S&P 500 index” and copy

the symbols from one of the financial sites.

Filters
• Remove from your follow-up list all stocks priced at over $100, as they

will not only be too expensive but also too volatile for novice traders.
• Remove all stocks below $10. We have already discussed the fact that

as beginners, it is best to avoid trading in small caps which institutional

traders are generally prohibited from buying.
• Remove all stocks with intraday ranges of less than 30 cents per day,

including the “heavy” stocks that show little volatility, such as Microsoft
(MSFT).
• Remove all stocks with very low volumes, initially those showing less

than 2 million shares per day, and later as you expand your list, to those
showing less than 1 million shares per day.
• Compile your list from what is left.

Over time, once you get to know the stocks you like most, and even if
they are not included in either of those indexes, you can add them to your
list while removing others, as you see fit. Most likely, after some months of
trading you will have developed your winner list.