In investing, a watchlist is a list of securities an investor or trader makes in order to monitor potential opportunities. A watchlist may consist of just a few stocks or hundreds of trading instruments. No matter the size, the watchlist is designed to give the investor or trader relevant information for making important decisions and keeping up with the market. Watchlists often apply to important stocks in a particular sector, allowing an investor or trader to see which stocks in that sector are currently undervalued. Often the investor will use a watchlist to see when a security meets certain criteria for being bought or sold, such as trading over a particular volume, breaking out of a 52-week range, or exceeding its 200-day moving average. Valuation measures such as price-to-earnings, prices-to-sales, or price-to-book ratios may also be used.
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