This content details a trader's systematic approach to building a watchlist and identifying trading opportunities, with a preference for short positions on opening range breakdowns.
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hey guys Brian from barabol traders here
it is May 12th on Saturday little late
on the post you can may try to get those
off on the same market day but today I'm
gonna talk a little bit about what I do
or what I go through when I'm looking
for my watch list this is in response to
questions from a number of people about
the process I follow so I'm just gonna
spend a little time talking about that
before I go over the one trade I did and
Paul Jesus maybe a little bit longer
than normal but yeah basically my pre
market scan first off I like just say I
do favor short positions going short on
an opening range break down versus long
so I just tend to find them a little
more predictable and first thing I'll do
in the morning even before I get on the
the chatroom I'll do a pre market scan
or pre market do some pre market
research which you know I read get a few
emails from Ben Zynga and CNBC giving a
little bit of a pre market overview and
I just read up on those a little you
know it takes me a couple minutes and I
just read those and just to get a sense
of what's going on in the market what's
in play
why is it in play I don't know why I
know Andrew doesn't like to do that but
it's just my personal preference I just
like to know what's going on and I go
through the same process
pretty much that Andrew does we look at
the trade ideas scanner and we look at
our gap errs watch list
so I'm looking and focusing more on the
ones that are gapping down as opposed to
the ones that are gapping up and the
other place I look for opportunities to
trade is is on my personal watch list
and I mentioned this before I do have a
sort of a personal watch list that I
keep and I just base it on stocks that
are currently in favor or currently
being played and that's that's you know
stocks drop off it and come on it just
based on what's going on I mean we were
playing mu for a while there and it's
still on my watch list you know that
kind of stuff so you know we've got
about a dozen stocks on there
I like to go through as well and just
see what they're doing but typically
what I do is I look for gap downs on the
TI gaffers watchlist five to ten cent
percent is like ideal you know fifty
even if it's fifteen or twenty I mean
they all seem to if they're gapping down
that much they all seem to fail more at
some point and you know Symantec was a
one that on Friday really you know it
started out low really extended and it
went lower so yeah so anyway but ideally
I'd like you know I like to focus on the
five to ten percent ones to start and
drill down and look at those so I the
one thing I gotta watch out for and I'm
just going to mention this is you know
watch out for stocks that are that have
a high level of short interest because
that can really affect how a stocks
going to trade TTD I think we had a
really high level of short interest if
I'm not mistaken there think it was like
over thirty percent and it was gapping
up and that problem probably was one of
the catalysts that drove that thing
higher right at the open and if you've
got a stock that's gapping down with a
large short interest you know you have
to wonder if you know and then run it to
the shorts you know we're gonna jump in
and start covering on a big gap down so
you know there could be a pop there so I
tend to find the ones with a high short
interest a little bit more volatile
especially at the open but it could be
predictable as well so anyway I just the
other thing I do just prior to the pre
market or prior to the market opened
especially in the pre-market last five
minutes I do tend to watch the price
action to see you know how volatile it's
gonna be and that's that kind of if it
if it starts to get the real volatile
before the before the market opens and
I'm gonna sit back and wait a little bit
and see see what happens as opposed to
maybe seeing a stock start to drop right
away and kind of jumping in so kind of
watch that last couple minutes before
the before the market opens so and of
course we go through the same thing we
go through find levels you know pre
market lows pre market highs look back
in time see where there's previous areas
resistance and you know get a sense of
where we're gonna enter and where we're
gonna exit and and that kind of stuff
so that's that's basically what I did or
what I do every morning and there really
wasn't on Friday there really wasn't
that much to trade off of on the at
least from what I looked at there wasn't
really that much to trade off of on the
ATI Gabor's watchlist so that's when I
went to my personal watchlist and I came
up with IQ and I MMR I think was the
other one and the other thing I do I'll
mention is that you probably noticed
that I don't you know Andrews watchlist
can be six five six seven stalks I tend
to focus on two maybe three at the most
and I just find that you know it's
easier to manage a couple as opposed to
five or six and especially if you're a
new trader you know you can really get
overwhelmed by trying to watch too many
stocks at once
you're better off trying to focus your
attention on several stocks that you
think have the best opportunity and they
may not work out you know you may miss
out but yeah that's I think that's a
better strategy it's certainly it's a
better strategy for me and Andrew seems
to do fine focusing on five or six again
this is all about you developing your
own personal style so let's look at IQ
here's the IQ day one minute let's look
at the daily first you can see here it's
in the last couple days this is a daily
chart of IQ you know it had a nice pop
here I had another nice day you know but
it's a long tail and right here and then
it was it gapped up and I kind of
thought you know it's three days gap and
you know that's probably getting
extended and that's what made me think
okay maybe there's a it's kind of weird
but it's gapping up but maybe there's a
short opportunity here so that's kind of
why I got interested in this one and
let's take a look at the daily so you
can see here the pre-market actions kind
of steady this is your pre market low
here and so the open thing jumped up I
wasn't going to take that trade I just
wanted to see how you know how it all
panned out and it you know it it kind of
stalled out here so I just kept focusing
on it because that was the you know I
had that in I MMR I think was the other
one that I was watching so I was looking
for a breakdown of sort of this level
here and when I saw it starting to pull
back here you know I kind of felt like
it was either gonna bounce from here or
it was gonna you know punch through
there and go lower and so when it
started hitting down here I got it short
and and you know I a little bear flag or
here didn't really make much of a much
of a flag at all and just continued
lower so I think I've covered it right
down in this area here so that was that
was coming to the rationale but you know
this one I had to sort of sit back and
wait for it to resolve you know took six
or seven minutes before you know for I
did an entry on this thing so anyway
that was kind of the rationale behind
that trade like I said I didn't find
much else I could have traded TTD you
know for a opening range breakup and I
know some of the other people in the
room I think Brendan maybe traded it and
so that was been that was a nice
opportunity that I did miss just because
I guess I had a bit of a always have a
bit of a short bias for the opening
range breakdown so anyway that's it so
hope that was gave a little bit of
insight into what I do in the morning in
terms of building my own watchlist and
you know you can use whatever you
think's valuable in that and will
develop your own style so guys and gals
have a great rest of the weekend and we
shall see you in the chat room on Monday
morning have a good weekend everyone bye
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