Creating a relevant watchlist is crucial for any trader or investor. Even if you’re not directly trading a specific asset, understanding its trend can provide valuable insights into the broader market dynamics. Let’s build a watchlist together from scratch.
A watchlist is simply a list of indices, stocks, cryptocurrencies, and various markets, ordered according to the overall relevance of that market or its impact on the assets you’re trading. Let’s simplify this process to ensure everyone understands.
The relation between assets
All markets are somehow interconnected, as we’ve seen in our recent articles and videos based on the work of John Murphy. For example, commodities often move in the opposite direction of the US dollar. The Brazilian stock market moves in tandem with the US market, exhibiting both positive and negative correlations.
The key here is to never focus on just one market. Whether you’re day trading, swing trading, position trading, or investing, you must consider multiple markets simultaneously. If trading were easy, everyone would be a day trader, right?
Now, let’s delve into the main markets to monitor. This video caters to traders and investors across all markets, including the Brazilian stock market, cryptocurrencies, and Forex. I’ll cover the primary markets in each category.
Speaking of the Brazilian stock market, I’d like to mention that this channel is partnered with BTG Pactual. We use BTG for day trading with the Profitchart platform and for long-term investments.
My Watchlist
Let’s begin by adding SPY to our watchlist. Why SPY and not SPX? Well, the SPY was the first ETF issued in the US market back in 1993 and has since become the largest traded fund. It tracks the S&P 500, which serves as the main benchmark for the US market. Therefore, it’s used to compare relative strength between individual stocks and market sectors. You can find detailed explanations of these and other important ETFs in John Murphy’s book, which I’m dissecting on this channel.
Now, some might wonder why not SPX? The difference lies in leverage. SPY has a different decimal point, offering more granularity. If you prefer using SPX as a reference for the S&P 500 when trading the Brazilian stock market, that’s fine. However, considering SPY’s status as the largest traded equity fund, I prefer including it in my watchlist.
Check out my video for a deeper understanding: