Like what we have discussed earlier, there are a lot of stocks to choose from and it would be very time-consuming to go over them and analyze them one by one. Let us admit that a lot of these stocks are useless at the current moment so analyzing them would just mean you are wasting your time. This is when the stock screens enter while before you create your trading plan. Most of the day traders use this to help them choose which stock to analyze. It helps day traders, narrow down their search, and make better decisions where they trade their money.
Stock screening is the method of searching stocks or companies that meets a specific set of financial criteria. It consists of three components which are: a database of companies, a set of variables that day traders could tweak, and a search engine that generates the list of companies.
The database of the companies means that it has a list of all the companies that are registered in the securities stock exchange. It lets day traders know which companies are available for trading, and gives an overview of its stock price.
The set of variables means the criteria that you would want to search for a stock. Are you looking for a stock that is currently leading the market? Or those that are lagging but are entering the uptrend movement? Are you looking for blue-chip stocks or penny stocks? Or stocks that are in a particular industry or sector? There are lots of variables that you could enter but focus only on variables that you have already learned. In that way, you could have a finer list.
After setting up the criteria, you may run the search engine, and it would show up the list of all the companies that fit your standards.
Usually, online trading platforms have stock screeners in them already. But if you don’t have online trading platforms yet and would like to start applying your knowledge about the stock screener, you could use the free stock screeners that are widely available for day traders. There is Yahoo! Finance, FinViz, and MSN Money. They all have different interfaces and you could decide which one to use
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