Yeah, this is the best way to do it. I've pretty much never used "Show new replies to your posts", as it very rapidly turned in to a mess, even within a few weeks of signing up to the forum. Pretty much any thread on boards such as Bitcoin Discussion will turn in to a spam megathread given enough time, and I definitely don't want to be alerted to every piece of one line nonsense for the rest of time.

Just set it up to automatically add all posted-in threads to your watchlist, and then unwatch the ones you don't want to follow anymore.