Stock Screeners – Which One to Use?


Day trading is not just about sitting in front of the screen staring at it till something moves. Besides the various strategies that traders use to work a volatile market, they also have a few tools that can help them in achieving the optimal outcome of their investments. After all, if they don’t find ways to make it work, then there is no point in the whole practice.

These tools are referred to as stock screeners or stock scanners. Built to help any trader to make a slightly more precise decision on which stock to buy and which one to drop or sell, without any trouble. In theory, these tools help in scanning the online databases of their thousands of stocks for you based on your defined metrics.

There are a few good ones to try out, but it’s important to read about each one to figure out the option that’s best for the day trading website that you use regularly. They come in two types, free or subscription.

A few of the many other aspects these screeners help you to screen are:

  1. Market capitalization
  2. Dividend yield
  3. Price change percentage
  4. Average volume
  5. Price
  6. Price-to-earnings or P/E ratio
  7. Average five-year return on investment (ROI)


How Does It Work?

These tools are very helpful in finding those stocks that are geared towards performing well over a certain period. Any user can insert a certain set of criteria using the different options of filters, and as such, the more precise your filters, the fewer stocks will be displayed in the results. This tool enables itself to analyse hundreds of different stocks within a very short period, saving you a lot of time when doing it manually yourself. And in this game – time is money!

If you have a trading strategy (the method you will use to buy and sell your stock), these tools can help you achieve your goals within no time. Find out more about how to set up a good strategy via this online source.

Specifications may include things like the price triggers, size of trade entries, analyst estimates, historical data of the past years’ results or 5 years chart and other additional technical indicators that will show future performances of those stocks you have chosen to trade.

Are Screens and Similar Scanning Tools a Good Approach?

The simple and straight-forward answer to this is – yes. There is a reason why day traders use these tools, and this is because there are two main advantages to using Stock scanners and screeners:

The first reason is that these tools allow you to explore the markets for various stocks within seconds, whereas this would normally take you days or even weeks to do manually.

The second reason is that a screener can help you to be a lot more structured about recognizing stocks that meet certain strict criteria, as opposed to chaotically capitalising in whatsoever stock appeals to your senses or is recommended by someone else. The other advantage is that the results it produces are in real-time across all boards and most of them are conveniently accessible via mobile with user-friendly interfaces.

The advice here is not to rely 100% on the results of these screenings, and to do your additional research as well. After all, it still is a computer and sometimes it could miss a few important details. Just for your sake of peace-of-mind, do some extra sniffing around. The appeal about these tools is also that they have different types for beginners until the professionals, so you can start with a basic one and work your way up.


Categories of Screens

It doesn’t stop at purchasing the first screening tool you find, but rather there are a few categories that you need to realise before you make your final decision on the type of investment (or stocks) you want to go for, namely:

Short Selling Screen if you’re looking for a high-risk investment approach, this is your go-to. The focus is on identifying overvalued companies that are fragile in trying to profit from falling stock prices.

Bargain Investing Screen is for those who are looking for the extremely out-of-favour stocks on the market. Walter Schloss’s bargain investor screen is a good example of this and he agreed that “if a business is worth a dollar and I can buy it for 40 cents, something good may happen”.

Quality Investing focuses on companies that have a sound business metric, for instance, Return on Investment based on the fact that they continue to outperform on the markets. Sort of like Warren Buffets company Berkshire Hathaway.

Income Investing is focused on profit created by dividend income as opposed to capital growth.

Growth Investing hones in on selecting those stocks that are still in their infancy i.e. in the growth stage of their life.

Contrarian or value investing Screen seeks to profit from other investors’ errors by looking for stocks that are abandoned by the market and are, as a result, are the cheaper option stocks to buy. This is in comparison to the ‘high-flyers’  on the market, which are stocks that out-pace all the others.

Momentum Investing (or a 52-Week High Screen) last but not least, we have the momentum investing screen type, which is based on buying previous winning stocks and selling short their predecessors, when these stocks persist in their comparative.