Before you can compare relative strength across a watchlist, you need a watchlist worth comparing. Most traders start with too many names gathered from news alerts, screener results, and tips from forums. The result is a list too large to rank meaningfully.
Step 1: Pick three sectors
Choose three FTSE sectors you understand well enough to evaluate individual names. Common combinations we see in workshops include financials + industrials + consumer staples, or miners + energy + basic materials. Avoid picking sectors purely because they are moving — pick sectors where you can articulate why a specific company belongs on your list.
Step 2: Set inclusion criteria
Write down three rules every name must meet. Examples from recent workshop participants:
- Minimum average daily volume of 500,000 shares
- Listed on LSE main market (no foreign listings)
- Market capitalisation above £500m
Your criteria will differ based on your trading style. The point is having written rules you apply consistently rather than adding names ad hoc.
Step 3: Select 8–12 names per sector
Within each sector, pick the names you would consider trading if conditions were right. Aim for 8–12 per sector, giving you 24–36 total. Include a mix of large-cap leaders and one or two mid-cap names with strong RS potential. Do not fill a sector quota with names you would never actually trade.
Step 4: Document your rationale
Next to each ticker, write one sentence explaining why it is on the list. "Large-cap bank with consistent dividend" is better than no note at all. During your first RS ranking session, these notes help you decide whether a falling RS line means "remove from list" or "temporary pullback in a strong name."
Step 5: Review monthly, rank weekly
Once a month, review whether each name still meets your inclusion criteria. Has volume dried up? Has the company been acquired or delisted? Weekly, rank the surviving names by RS slope without adding or removing tickers mid-week.
Workshop participants who follow this structure typically reduce an initial 50+ name list to 28–32 focused names within the first session. See our Watchlist Lab for the ranking method that follows construction.