Traders who are typically looking to play the market every day know the most invaluable tool in their arsenal is a good stock screener. Stock screeners help traders filter a large database of stocks to a more manageable list for further analysis. There are actually plenty of free and paid stock screeners out there offering different feature sets as you begin to do your research online. Namely, a good stock screener helps by saving time, removing emotion and behavioral biases, and finding investment opportunities that may have been hidden.
Stock screeners like Finviz save traders time by filtering out all stocks that don’t match a specific set of criteria. This is invaluable for technical analysis traders, who are looking to trade based on a known set of data. A good way to find undervalued stocks is by looking for stocks with a price-to-earnings ratio below your target. You can use the same screener to find stocks with high year-over-year growth. Sorting through all this information for all the stocks available would be too time-consuming to trade accurately. That’s the number one reason why stock screeners are such an invaluable tool to both day traders and swing traders.
Removing Emotions & Biases
Investors tend to favor stocks that have consistently earned money, but this can lead to unwise investment decisions when the market changes. These so-called behavioral biases can be difficult to remove without an impartial look at all the data available. It also helps remove everyday biases like being exposed to companies and thinking they’re a good investment. Just because Safeway is your favorite place to shop doesn’t mean it is a good investment opportunity for you personally. One of the main benefits of using a paid stock screener is access to more stocks included in the screener. Some screeners limit their free screeners to a pre-set number of stocks instead of taking them all into account. Removing emotional biases against certain stocks can help you find hidden undervalued gems that could have good earning potential.
Find New Investment Opportunities
Stock screeners can help you narrow down your search to stocks that fit your investment criteria. You’ll find stocks in your list that you know absolutely nothing about. Less familiar stocks are often overlooked and could be undervalued as a result. Stock screeners bring these companies to the forefront and help savvy investors get in on the ground floor of their earnings potential. Picking which stock screener you use comes down to a variety of factors. Day traders will need a stock screener that provides real-time updates to stay with the beating pulse of the market. Swing traders can get away with a time delay since they’re often going for trades throughout days or weeks, rather than within one day. Finviz offers both free and paid stock screener services, so you can try it out and see if it fits your needs. The paid version provides advanced charts and backtesting data to help you find the sweet spot with technical indicators.