Evaluate your technical stock pick with a checklist

Using an automatic stock screener to find the best technical stock pick is first step in stock-picking process. When I scan through the whole market for stocks that fit my preferred I receive a list of market picks.

Typically I receive between 100 – 300 stock symbols for each of broad scan I use (like for my breakout or pullback strategy).

Then, I manually go through these lists. Using my special method for selection of best stocks and ETFs, I select the best stock pick and create my final short list of stocks for a technical swing or a position trade setup.

Checklist is good stock market trading tool

Some time ago, I realized that it can be useful to write the criteria I use for creating the final short watchlist on paper. I created a checklist of technical conditions that must be met for a good swing trading stock pick.

Why do I use it ?
Such a checklist ensures I won’t forget any important criterion during the evaluation of my scanner pick list. It also helps me to fix all the rules/criteria in my head.

How do I create such a checklist?

I find a chart I like for a specific type of swing trade setup. I write all the technical criteria I see there to the checklist. Look at this technical chart example of a typical breakout setup:

GILD checklist template

What do you see on this pick chart? I see these points:

  1. Price is above 20 EMA
  2. Price is above 50EMA
  3. Price is above 200SMA
  4. 20EMA is above 50EMA is above 200SMA
  5. Easy readable horizontal resistance level
  6. Cup with handle chart pattern
  7. It’s possible to draw uptrendline

OK. That’s all. Now you have checklist with characteristics of a good breakout swing trade setup.You can start to look for your technical pick.

Every time you watch some technical chart of your market pick, compare it to the checklist points. If you find all the points on the chart, you can consider it a good breakout swing trade setup. And you can continue with planning entry, target and stop-loss levels for such technical stock pick setups.

You can create similar checklists for each type of setup you’re using for trading.

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