Gone are the days when you had to dig mounds of reports and piles of documents for researching stocks. Thanks to the internet and the whole bunch of powerful technical analysis and screening tools, users can now research hundreds of stocks in just few seconds. The same chart conveys different messages to different set of traders and different traders having same trading style.
To begin with, you choose the index to trade in and select the instrument and then you opt for the filters or qualifiers and the stock screener tool will fetch you the list of stocks which matches the filter criteria. Qualifiers or filter criteria can be based on the fundamental analysis or technical analysis. Fundamental analysis filter criteria such as industry type, market cap, average volume, P/E ratio, earnings growth, etc can be used for screening stocks. Technical indicator data can also be used for screening, indicators like RSI, MACD, Moving Averages can be used as qualifiers for screening stocks. For example, you can screen stocks which are trading below 200 day Moving Average or stocks trading above RSI of 70%. Some screeners allow you to use candlesticks based screening, bullish harami, shooting star, etc can be used as qualifiers for filtering stocks.
Investors can use stock screeners to filter stocks that are poised to show good performance over a period of time whereas traders may use screening tools to find high probability out-performers in a short span of time. Traders/investors can use varying number of filter criteria. More the number of filters, fewer the stocks displayed.
There are whole bunch of stock screening tools available on the internet ranging from basic research capacity to the most sophisticated programs. Many of them are available for free and some for modest subscriptions. More sophisticated screening tools can offer you to run screens which will save you hours and hours of labor to narrow down the probable candidates.
Some of the characteristics of a good stock screener:
Easy to use: screening tool should be user friendly and easy to use
Robust information and trading history: good screener should also offer you robust database of information and trading history for each stock.
Inbuilt options: some programs will have inbuilt options and parameters already set to fetch certain results.
Vaue ranges: good screener should offer you good number of expression operators to enter range of values.
Absolute and relative screening: relative information can be more useful than just absolute numbers. For example, percentage changes can reveal more information than just the absolute numbers.
Keep your screening qualifiers simple and use the indicators you believe in and choose your screening tool wisely so that your aim of making enough money and reaching your financial goals are achieved with ease.
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