Getting Started with Stock Screeners: What You Need to Know

October 11, 2018

Choosing the right stocks for your investment portfolio isn’t a simple process. There are countless companies out there to choose from and zeroing in on a good stock is incredibly difficult as a result. Unless you know a great deal about the stock market already, it’s particularly tough to separate the information you need, from the worthless data that floods the internet. The good news is that a stock screener can help.

Solutions like the Finviz screener give you a filter where you can get a more accurate idea of which companies you should consider investing in. There are literally thousands of stocks on the US exchanges, so it doesn’t make much sense to track them all by yourself. A stock screener limits your exposure to stocks that aren’t right for you.


How Does a Stock Screener Work?

Stock screening works by exposing you only to the companies that meet very specific financial criteria. A stock screener has a handful of important components to consider, including a database of companies, a screening engine, and a set of essential variables. Using a screener is simple. All you need to do is answer a series of questions like:

  • Is there a specific industry you’d like to trade in?
  • What like of price to earning range are you looking for?
  • Are you looking at companies with stocks that are falling in price?
  • Do you prefer small-scale or large-scale stocks?

Good screeners will allow you to search according to any criteria that suits you. When you finish entering your answers, you’ll get all the answers you need as to which stocks on the market meet your current requirements. There are countless great screeners out there. The biggest challenge for most people is figuring out what they should be screening for to get the best results. Some screeners offer hundreds of variables to consider, which means that you have a big choice ahead of you. If you’re concerned, stick with a screener with pre-set variables.

Should You Be Using a Stock Screener?

Stock screeners focus on the measurable factors that change the way a stock’s price moves up or down. Because of this, your stock screener will help you to conduct an effective quantitative analysis into what’s possible with your investments. Screening allows you to focus on a host of important variables, including revenue, market capitalization, and even profit margins so that you can get a better insight into the stocks available for you. However, there are things you can’t search for, including opinion and qualitative data.

Most basic screeners come with a pre-set selection of variables you can choose from when you’re searching for the ideal stock. However, there are screeners out there that are more customizable too. If you’d prefer to use a customizable screener, then you may need to answer a lot more questions about your investment strategy. This means that the most advanced screeners are generally easier to use when you understand the stock market a little better, and you feel comfortable explaining the details of your financial strategy.