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What is a stock screener, and how is it used in Day Trading?​

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​​​A stock screener is a tool that allows traders and investors to filter and search for stocks based on specific criteria. It helps identify stocks that meet certain parameters, which can be tailored to individual trading strategies. Stock screeners can save time and enhance the decision-making process by narrowing down the vast universe of stocks to a more manageable list that fits the trader's specific needs.

Features and Criteria of a Stock Screener

Stock screeners typically offer a variety of filters that can be used to find stocks based on different criteria, such as:

Fundamental Criteria:

• Price-to-Earnings (P/E) Ratio: Measures a company's current share price relative to its per-share earnings.
• Earnings Per Share (EPS): Indicates a company's profitability.
• Revenue Growth: Measures the increase in a company's sales over a period.
• Market Capitalization: The total market value of a company's outstanding shares.

Technical Criteria:

• Moving Averages: Such as 50-day or 200-day moving averages to identify trends.
• Relative Strength Index (RSI): A momentum oscillator that measures the speed and change of price movements.
• Volume: The number of shares traded in a given period.
• Price Change: Filters based on percentage changes in stock prices over specified periods.

Descriptive Criteria:

• Sector and Industry: Filters stocks based on industry or sector.
• Exchange: Filters stocks listed on specific exchanges (e.g., NYSE, NASDAQ).
• Country: Filters based on the country of the company's headquarters.

How to Use a Stock Screener in Day Trading

Define Your Trading Strategy:

• Determine the key criteria that align with your day trading strategy. For instance, if you focus on momentum trading, you might look for stocks with high volume and significant price movements.

Set Up Filters:

• Input your criteria into the stock screener. For example:
  • Price Range: Stocks trading between $10 and $100.
  • Volume: Stocks with a minimum average daily trading volume of 1 million shares.
  • Price Movement: Stocks that have moved at least 3% in the last day.

Analyze the Results:

• Review the list of stocks that meet your criteria. Analyze their charts and additional indicators to identify potential trading opportunities.

Create a Watchlist:

• Save the filtered stocks to a watchlist for closer monitoring throughout the trading day.

Monitor and Execute Trades:

• Keep an eye on your watchlist during market hours. Look for entry and exit signals based on your trading strategy and technical analysis.
• Execute trades as opportunities arise, adhering to your pre-defined risk management rules.

Example of Using a Stock Screener

Suppose you're a day trader focusing on stocks with strong intraday momentum. Here’s how you might use a stock screener:

Criteria:

• Price Change: Stocks up at least 5% from the previous close.
• Volume: Average daily volume greater than 500,000 shares.
• Market Cap: Mid-cap stocks with market capitalization between $2 billion and $10 billion.

Filter Setup:

• Open your stock screener (such as Finviz, TradingView, or the screener provided by your brokerage).
• Enter the above criteria into the screener’s filter options.

Review Results:

• The screener generates a list of stocks that have moved significantly and have high trading volume, indicating potential trading opportunities.

Technical Analysis:

• Examine the charts of the filtered stocks to look for patterns, support and resistance levels, and other technical indicators that match your strategy.

Trade Execution:

• Add promising stocks to your watchlist.
• Monitor these stocks for intraday movements and execute trades based on your trading plan.

Popular Stock Screeners

• Finviz: Offers a wide range of fundamental and technical filters.
• TradingView: Known for its powerful charting tools and extensive filter options.
• Yahoo Finance: Provides basic screening tools with a user-friendly interface.
• MarketWatch: Offers fundamental and technical screeners with real-time data.
• Brokerage Screeners: Many brokers (e.g., TD Ameritrade’s thinkorswim, E*TRADE) provide integrated screening tools.

Conclusion

A stock screener is an essential tool for day traders, allowing them to efficiently identify trading opportunities that meet specific criteria. By setting up and using stock screeners effectively, traders can enhance their decision-making process, focus on promising stocks, and improve their chances of making profitable trades.

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