How to Get Started With Stock Screeners

The one part about stock trading you have to be aware of is your research. Researching the stocks that you’re interested in trading is necessary if you want to find the best stocks for your money. If you’re looking for the best potential returns, you have to look into the company stocks and gauge if it’s going to be worth the risk. We’ll be looking at all that and more when I show you how to get started with stock screeners.

  • A stock screener or shares screener is a tool that traders and investors use to analyze stocks according to specific search criteria. This is a powerful tool for aiding stock analysis.
  • Stock screeners work by showing users specific data about global, international, and domestic exchanges and markets. The user selects from various predetermined criteria to sort through various company stocks.
  • Using a stock filter to screen your investment choices can be beneficial for your own research, but there are several limitations that you should be aware of when you use a shares screener to research stocks and trading options.
  • Stock screeners can be advantageous for researching things like technical factors, earnings data, and predicting potential returns, but these tools shouldn’t be the only means of stock analysis.

What Is a Stock Screener?

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A stock screener (options screener or shares screener) is a tool that traders use to research and analyze stocks they want to buy and sell. Stock screeners are extremely useful tools for gauging the performance, growth, and potential returns of various stocks and securities so that you can narrow down your options to the stocks and shares that fit your specific criteria.

A stocks and shares screener lets you select certain parameters that help you sift through the thousands of different stocks. You can look for stocks according to criteria you choose like the IPO, closing prices, historical growth, industry and sector, and more. With a stock screening tool, you’re able to find and study only the types of stocks and securities you need for your financial goals.

Are you ready to get started working with a stock screener? Let’s dive into how they work and what they can do for us.

How Does a Stock Screener Work?

In the simplest sense, stock screeners work by filtering through thousands of different stocks between the various indexes. They do this based on two things: the search criteria you select and the predetermined data on company shares and stocks that are available on domestic, international, and global markets. Basic screeners, like a free screener, work through predetermined variables that are available to you to search for.

Many stock screeners also provide charts of different companies’ activity, which you can usually find through the various selections the stock screener tool has. These charts are another way to quickly view what’s going on with a specific index, stock, or other securities.

Let’s break this down using a basic screener like FinViz’s free stock screening tool. You can jump on this free screener website and filter the types of stocks you’re looking for according to market capitalization, where you can select a specific value that company shares must exceed or fall below. Ultimately, free screening tools are great for quick insight into the market’s activity. However, if you want up-to-date and real-time data (which is incredibly important for making trading decisions), you might think about a subscription to a stock screening resource.

How to Use a Stock Screener

Let’s walk through the steps to get started using a simple stock screener for U.S. markets. We’ll also look at how to use the information we find for adding to your own research of the stocks you’re trading.

1. Choose a Stock Screener Website

First of all, you’ll need to head to a free screener tool like FinViz, Yahoo! Finance, or another website of your choice. Here are some other basic screeners you can use, too:

  • TradingView.
  • TD Ameritrade.
  • Stock Fetcher.
  • Stock Rover.
  • Chart Mill.

Once you get to the website you want, you can start your search. If you have a brokerage account through an online trading platform, there should be a stock screener available for you. If not, these websites can work just fine.

2. Look for Specific Criteria

It does no good just to start scrolling through different selections. You should have a pretty good idea of what you want to search for, especially if you’re actively trading in securities. As an example, let’s use this list of criteria for searching for stock options. So really, we’re looking for a shares screener that offers options screening tools so we can narrow our choices down by specific selections we make:

  • Think about whether you want large- or small-cap stocks.
  • Search for companies with stocks that dipped in value or ones with high price moments.
  • Look at the price-to-earnings ratio and determine what you find acceptable.
  • You can search by industry or sector for tech or medical options.
  • Look at different factors that can affect the stock price, too, like profit margins, revenue, volatility, and market cap.
  • You can also use the stock screen to look at a company’s debt-to-equity ratio and past performance to help you get an idea of what might happen within a day, week, or even a month.

The biggest issue you might find when you use a stock screener is this activity. You can sit down beforehand and think about what you find most important for your trading strategies and build your search criteria off of that.

3. Be Aware of Limitations and Use Screeners for What They Are

Most stock screeners only have quantitative information on stocks. This kind of data doesn’t account for any of the qualitative factors (like pending bankruptcy, growing customer dissatisfaction, or other issues companies might face) that you’ll also want to watch for when screening stocks. It’s important to use the information from your stock screen as more of a supplement to the other research you do on your investment options.

Another limitation to be aware of when using basic screening tools is that they tend to update information on completely different schedules than what may actually be happening in real-time, so you’ll need to keep an eye on the timeliness and relevance of the information you’re looking at.

You’ll want to watch out for industry- and sector-specific blind spots, too. A good example of this limitation is that some stock screeners don’t always show low-cost shares, so if you’re searching for tech companies with low price-to-earnings ratios, don’t expect a whole lot to show up on the screen. Even a paid subscription to a stock screener has its limitations, but they’re usually fewer than the basic sites you can use, so always do more research into your trades.

How Using a Stock Screener Can Be Beneficial for Your Stock Analysis

Now that you have an understanding of how stocks and shares screeners work and how to use them, let’s dive into some of the advantages that come with adding screening tools to your stock analysis.

It’s important to understand the elements of well-rounded stock analysis to see how a stock screener could be useful for stock insight. Generally speaking, there are several critical points that make up any effective stock analysis and research. Let’s break down some ways stock analysis can work so we can see how a shares screener can help us:

  • Technical analysis: Technical analysis tells us about the supply and demand of different stocks within the stock market. Screening tools show you this information through historical stock performance, current trends, and patterns in the way the market moves.
  • Price-to-earnings ratio: This percentage shows us the relationship between how much the stock costs versus how much you’ll earn on that cost. The lower the P-to-E ratio, the more favorable the stock option.
  • Earnings per share: The EPS value shows how efficiently a company can bring in the revenue that eventually flows to its investors. Rising values in a company’s EPS means your shares are worth more.
  • Price-to-earnings growth: You can use the patterns and trends you find through your screening to make predictions about a stock’s growth.
  • Return on equity: Use this valuation to determine how likely you are to make a profit off of the company shares you trade.

Using a stock screener can definitely be advantageous for diving into this kind of research on the stocks you trade. Even though a deep analysis of stock options includes more points of research, these several are great starting points that you can look for within a screening tool.