Many traders have come to me and asked, ‘what the heck is a Universe List?’ You may be wondering the same thing and, more importantly, how will a Universe List help you win more trades.
Well, in this post you’ll get answers for both of these questions plus learn how you can build your own Universe List in just a few easy steps.
What is a ‘Universe List’?
There are thousands of stocks out there. So many that it can be completely overwhelming for anyone to have to go through each one and decide if it’s the right one to invest in or trade. Countless hours can be spent in front of a computer and you’d still have the uncertainty if you chose the right one…or made a mistake.
A Universe List will help you solve this problem! A Universe List is simply a list of all of the stocks you’re interested in.
You hear about a stock on social media and it interests you. Put it on your Universe List.
A stock passes one of your scanners. Put it on your Universe List.
You’re signed up to a newsletter and they mention a stock that grabs your attention. Put it on your Universe List.
You get the picture…
Keep this list in one spot for easy access. Whether its in a spreadsheet, with your broker, or on a charting service like TrendSpider. Keeping it in one place makes it a lot easier to manage.
Create a Set of Rules for your Universe List
Now you might be thinking: ‘if I’m tossing pretty much any idea on there, this sounds more like a garbage dump than a list!’ And you’d be right!
So your next step is to come up with a set of rules or guidelines for stocks to get onto your Universe List. This doesn’t have to be complex. It can be as simple as:
- This stock trades at or above _____ price.
- This stock trades at least ______ shares on average each day.
- This stock’s current quarterly earnings are above _____%.
Figure out what bare minimum qualities are important to you in a stock. Write them out. Congrats! You now have the foundations of what it takes for a stock to get onto your Universe List!
How Does a Universe List Help me Trade Better?
So how can having a Universe List help you trade better?
It helps in a few ways:
- FOCUS: Instead of any of the 10,000 stocks in the market landing on your radar, you’ll be focusing on about 1% of that (about 100 or so stocks).
- SPEED: You’ve got one place to go and view the stocks you’re interested in.
- GAUGE MARKET CONDITIONS: Yep! This is now going to be one of the key ingredients to the secret sauce of your trading success! If the bulk of the stocks in your Universe List are setting up in actionable ways for you, then its time to get active! If they’re not, then its time to wait. Simple as that!
Here’s a tip:
Setup a maintenance schedule for your Universe List.
Just like your lawn, house, car, and health, your Universe List requires some maintenance for you to get the most out of it.
So what do you need to do to maintain your Universe List?
You can do it in 2 simple steps. I call them Pruning and Planting.
Step 1: Pruning
During the Pruning step, you’re going through your Universe List and double checking that each stock on it still meets your minimum criteria. If it does, it gets to stay on the list. If it doesn’t it gets pruned.
Step 2: Planting
During the Planting step, you’re looking at any new ideas that have come on the radar. Maybe a friend gave you a ‘hot tip’. Here’s where you verify if that ‘hot tip’ meets the bare minimum criteria to get on your Universe List. If it does, go ahead and add it. It’s earned a spot on your Universe List.