Stocks to Watch

Day traders are always on the lookout for good stocks to watch and quick trading opportunities. And in the penny stock market these opportunities arise on a daily basis but how do you tell which are good stocks to watch as opposed to those you should avoid at all costs? The answer lies in a place where you might never expect it.

Most investors and day traders choose their stocks to watch based on a specific criteria. It might be biggest gainers for the day or highest trading volume. These lists are a great place to start but when you overlay this information with the activities of a specific group of successful investors, you really start to filter out the great stocks to watch.

A Bad Place to Find Stocks to Watch

Maybe surprisingly, the group of investors that we’re referring to does not comprise of financial professionals per se. They are not brokers or investment advisors. While this group technically should know more than the average investor they’re very rarely investing in the stocks they recommend and they have very little vested in whether you win or lose with your investments. Remember they get paid whether you buy or sell.

The second group you don’t want to follow step-by-step are the gurus that distribute free ‘stocks to watch’ lists. These might be penny stocks or blue chips that they feel are going to do something in the near future. The problem with this advice is that as soon as these tips get out to hundreds or thousands of investors, it quickly becomes worthless. Those that make the most money in the stock market are the ones with the gonads to zig when nearly everyone else is zagging.

A Better Source for Good Stocks to Watch

No, when it comes to the best stocks to watch, the group we’re really interested in following is the corporate insiders running the companies we’re looking at trading. These are the executives and directors that make the decisions that determine the future value of the shares. Obviously, they are in the best positions to predict which way their stock will go and how high or how low it should level out at.

It should be equally obvious that these insiders are not able to come out and blatantly tell the average investor when he or she should be selling the insider’s company shares. Privacy policies and confidentiality agreements do not allow for this. However, these insiders definitely send out very strong trading signals when they buy or sell their own company shares and companies with insider activity should always be considered good stocks to watch.

And when you combine insider trading activity with highest gainers, biggest losers, etc. you’ll put together a very intriguing list of stocks to watch. Follow the trading signals being put out by the insiders and you should be in a great position to improve your portfolio.


Reported on Sep 29, 2011

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