A stock scanner, which is also referred to as a stock screener, is essentially a screening tool. It goes through the markets to identify stocks that meet select criteria and metrics for investment as well as trading. The scanner can be adjusted where necessary to find candidates that meet the needs of a specified filter. There are three main components that you will find in a stock screener.
These include a set of variables, a database of companies as well as a screening engine. This makes it essentially easier to identify new trading opportunities, adding to overall efficiency and convenience for the individual conducting the scan. Traders and investors are depending more on stock scanners now, as they ensure one can get information quickly, and they are highly convenient to use.
Types of Stock Scanners
There are various types of stock scanners that you can choose from. There are technical scanners which are made up of specific candlestick formations. They are able to reveal price alerts which are the new highs and lows, and also any percentage price changes in certain patterns that are within the chart. This information is fully based on the stock price action.
Then there are fundamental scans. These are made up of financial metrics that are based on actual business operations. Therefore, you will find that they capture price earnings ratios, income and revenue growth, market capitalization, cash per share, book value and more.
Using a Scanner the Correct Way
The benefit if scanners is they make use of technology, and ensure that a candidate knows the best way that they can trade in record time. One needs to have some wisdom when using these scanners as without being adequately selecting, a trader may find they have spread themselves thin. Although a scan may be the solution that you are looking for to find brilliant trades, if you have minimal experience in trading, you may be tempted to trade without an actual efficient plan.
Once you have understood the fundamentals of using a screener, there are some questions that you need to use.
These include the following:
- How good is the price to earnings ratio?
- Which between small cap stocks and large cap stocks do you prefer?
- Is it stocks that have reached an all-time high in price, or stocks that are falling in price that you are interested in?
There are a range of other questions that you can include based on what you want to achieve, but these are great for starting out. The point is, the questions that you ask need to have measurable results so that you can perform an analysis that is quantitative in nature.
Stock traders will tell you that there is an abundance of stocks that are available online, which can make it quite challenging to identify which are the best that you can trade in. A scanner is essential for cutting out the clutter within the markets so that a trader can retain their focus on finding the most potential trades. The results that you receive are not final, rather they are filtered so that you can make an ideal selection.
To find a stock scanner, you should begin by looking at the trading platform that you are using, and you will find a basic one at the least. These types of scanners will look through an entire market or certain group of stocks. The alternative is a desktop scanner software that you can download onto your computer. This will give you results much faster, though you will need some programming knowledge to make the most of it.