First, a definition or two. A watch list is literally a list of stocks you want to keep an eye on. When and if you open a position in one of those stocks, it becomes part of your portfolio . So you could say that a watch list helps you determine your entry points, while a portfolio allows you to monitor your holdings and watch for exits. Many financial sites on the Web use the terms watch list and portfolio interchangeably.
Portfolio management is a field unto itself.
Here I'll be focusing solely on watch lists. Yet all too often, investors manage their watch lists in a haphazard fashion. They read about a stock and then place its symbol on a watch list. Nothing wrong with that, so long as you're not tempted to trade the stock without doing more research. A watch list lets you grasp the patterns of the stocks that interest you, just like a chart or a diagram would.