Are you frustrated when trying to find new stocks to add to your portfolio? Do you often feel that the hunt and peck method of uncovering worthy candidates is wasting your precious time? If you answered yes to either of those questions, then it’s time to explore the world of stock screening tools. There are dozens of reasons to use a screener. Before you can get underway, however, it’s also essential to know how to choose the one best suited for your level and style of trading.
Finally, every trader should learn the limitations of screening and know when to stay out of the market. So, why do so many new and experienced traders employ stock screening tools? Here’s the truth about why screeners are so popular and how to get the most out of the ones you select.
Why Use a Screener?
The number one reason people use stock screeners is to save time. If you want to pare down your list of worthy investment candidates based on industry, capitalization, share price range, recent performance, moving averages, price earnings ratios, or anything else, it might take you several hours to comb through lists of companies and ferret out suitable investment prospects. Screeners can do all the heavy lifting in a matter of seconds after you choose the characteristics you’re looking for.
How to Choose the Best
Learning how to use a stock screening tool means investing time and attention into the process. Fortunately, it’s easy to pick up the basics of screen-based functions, like sorting companies by capitalization, age, industry, dividends paid out, and dozens of other parameters. If you stick with a broker that supports TradingView such as easyMarkets you’ll have all the relevant features in one place and won’t have to switch between sites to get what you need. That’s because the TradingView stock screener function includes a wealth of practical, easy to understand functions for traders of all skill levels.
What Screeners Can’t Do
It’s crucial to understand the limitations of every tool you use in the stock selection process. For example, don’t rely on screeners to do the choosing for you. Based on your knowledge and preferences, it’s up to you to decide whether EPS, dividend payout ratios, moving averages, and other factors are important. When you screen, the tool will only deliver the results according to the limitations and restrictions you select. Never rely on a tool to tell you when to click the ‘buy’ button. That decision is up to you. Tools, even the best screening apps in existence, can help with some of the initial research and narrowing down, but they can’t do the uniquely human task of deciding to make a purchase.
When to Stay Out of the Market
If you prefer to follow small cap stocks, for instance, and focus on new issues priced between $3 and $5, chances are you’ll uncover plenty of companies that meet those criteria. However, that doesn’t mean they’re automatically candidates for investment. In a sideways or noisy market, it might be best to stay in cash and wait until there’s a clear trend in place.