Watchlist

A watchlist is a shortlist. There are several thousand stocks you could trade, and nobody — person or program — can form a sensible view on all of them, so traders keep lists of the ones they’re following. Being on a watchlist doesn’t mean you own the stock, or that you ever will. It means you’ve decided it’s worth looking at.

For example, somebody interested in chip makers might keep a watchlist called Semis with NVDA, AMD, AVGO and TSM on it. On most days nothing on it is worth buying. The point of the list is that on the day one of them does set up, they were already watching.

For automated trading a watchlist does a second job: it’s a boundary. A rule like “buy when the price dips below its 20-day average in an uptrend” will find dozens of matches a day across the whole market, many of them in companies you’ve never heard of and wouldn’t choose to hold. Pointing the rule at a watchlist means it can only ever act on names you picked in advance, while you were calm and had time to look them up.

In BotStock these are called lists. A strategy follows a list rather than copying it, so adding a symbol to the list next month means the strategy trades it next month — and each symbol on a list can be switched off for new positions without taking it off the list.

One thing a watchlist can’t do is make a rule work. A strategy that loses money on forty symbols rarely turns good because you trimmed the list to the ten where it happened to win; that’s fitting the list to the past rather than finding something that holds up.