How Many Assets to Watch/Trade?

Had dinner last night with a few other traders, and one topic that came up was how many stocks/forex pairs/etc each trader watches. We all concluded that typically day trading 3 to 5 provided a good assortment of opportunities, but more than that and it could actually be detrimental. That was just our number, yours may be different. You may prefer to watch more assets for opportunities, or you may watch fewer. In a world with so many asset options to choose from, we need to filter out most of them and find a core few to watch and trade. Here we will look at ways to do that.

  • Trade only one asset, all the time: When the EURUSD is moving a lot, say more than 120 pips per day on average, I will usually only day trade it. It will provide enough trading opportunities. When I traded stocks I did the same thing. If I found a stock that had good volatility and volume, I often traded it, and it alone, for weeks. I also trade futures, and I only trade the S&P 500 E-mini. ┬áDoing this requires the least homework and research, and you develop a “feel” for that asset. The downside is that trading conditions aren’t always ideal when you trade one asset, so you will need to know when to cut back on trades and be ok not trading during these tougher time periods.
  • Screen each night: This is a popular approach if you are day trading stocks. Each night you use a stock screener (website or software…Google it, there are lots of stock screeners, I often use and to narrow the universe of stocks down to a manageable list. You then further refine the criteria to a list of say 3 to 6 stocks. More than this and you may have too many stocks to look at, and will end up missing the good moves in them anyway. When I screen I typically am looking for a high level of volatility and I also frequently look for chart patterns so I can trade the breakout. Breakouts happen quickly though, so if you are watching more stocks than you can handle, you may end up missing them.
  • Only Trade off a Master List: This is another common approach, especially when trading forex. I have a list of 7 pairs I can day trade on, and a list of about 15 pairs I can swing trade on. In the morning I go through the charts of the 7 day trading pairs, and pick 1 or 2 which are moving well. I then only day trade those for the rest of the morning. Each night I look through my 15 swing trading charts, and place trades on whichever pairs have good setups…often 2 to 6 trades. This doesn’t require much research or time, produces multiple opportunities, but is still manageable. Compiling your master list may take a bit of time at first. Create a list of assets that you like trading based on how they move and that work with your strategies. Only monitor and trade the charts on your list.

The Final Word

There is no right or wrong here. You can trade one asset all the time, or you may opt to watch a number of assets each day. But keep it manageable. If you notice you missed some trades you should have taken, you are likely watching too many assets and can’t effectively trade them all. If you decide to only trade one asset, but it isn’t moving very well, you may want to have a master list which gives you more assets to trade. Strike a balance between having enough opportunity, but not overwhelming yourself with too many alternatives.