Shorted
Beginner
8 min read

Building a Short Interest Watchlist

How to create and maintain an effective watchlist of heavily shorted stocks. Learn filtering criteria, monitoring strategies, and when to act on short interest signals.

WatchlistsStock ScreeningMonitoring

Why Build a Short Interest Watchlist?

A well-curated watchlist helps you track potential opportunities systematically. Rather than reacting to headlines, you can monitor stocks over time and act when conditions align with your strategy.

Setting Up Your Watchlist

Step 1: Define Your Criteria

Before adding stocks, establish clear criteria:

  • Short interest threshold: Minimum percentage (e.g., 10%+)
  • Market cap range: Ensures adequate liquidity
  • Sector focus: Industries you understand well
  • Trend direction: Rising, falling, or stable short interest

Step 2: Screen for Candidates

Use the Top 100 page on Shorted.com.au to identify heavily shorted stocks. The industry pages help filter by sector. Look at both current levels and recent changes to spot emerging patterns.

Step 3: Research Each Stock

For each candidate, understand:

  • Why is it heavily shorted? (Valid concerns or misunderstood?)
  • What could prove the shorts wrong? (Catalysts)
  • What's the fundamental story?
  • What's the technical setup?

Monitoring Your Watchlist

Daily Checks

  • Review short position changes from ASIC updates
  • Check for company announcements
  • Note unusual price or volume activity

Weekly Review

  • Assess short interest trends over the week
  • Review any new stocks meeting your criteria
  • Remove stocks that no longer qualify
  • Update your notes on each position

When to Act

Don't trade just because a stock is on your watchlist. Wait for:

  • Catalyst confirmation (news, earnings, etc.)
  • Technical breakout or breakdown
  • Significant short interest changes
  • Risk/reward alignment with your strategy

Frequently Asked Questions

How many stocks should be on my watchlist?

A focused watchlist of 15-30 stocks is usually manageable. This allows you to track positions closely without being overwhelmed. Quality over quantity—better to know a few stocks well than many superficially.

What criteria should I use to filter stocks?

Common criteria include: minimum short interest threshold (e.g., >10%), minimum market cap for liquidity, specific sectors of interest, and recent short interest changes. Adjust based on your strategy.

Continue Learning

How to Read Short Interest Data
Master the art of interpreting short interest percentages, changes over time, and what high or low short interest signals about market sentiment.
Risk Management for Shorted Stocks
Strategies for managing risk when trading heavily shorted stocks. Includes position sizing, stop losses, and portfolio considerations.