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by Finage at June 6, 2023 5 MIN READ
The immense number of variables present in the world of trade can be difficult to keep up with, even for experienced traders and investors. As such, tools like stock screeners have been made to simplify things. But what is the stock screener that's been referenced thus far? Let’s look at the inner workings, how they're used and examples that are out there. While all this seems simple at first glance, there's quite a lot that has to be delved into.
- What you need to know about a trading stock screener
- Free vs. paid
- How it functions
- Best features and attributes
- Final thoughts
Let's start by defining the tool itself. A stock screener serves as a trading assistant, helping users (for example, investors and traders) streamline their search for stocks aligning with their requirements. These criteria can be mixed with multiple factors that progressively refine the search. The next list highlights several crucial criteria highly regarded by traders:
- Market cap
- Dividend yield
- Operating cash flow
- Earning per share
- Relative strength index
While they operate similarly and are connected, such a tool isn’t to be confused with a stock screener API (Application Programming Interface). An API stock screener is essentially a tool that allows developers to sift through stocks using similar criteria. Using a screener API service, without a doubt, requires quite a bit of coding and programming language knowledge, while also knowing how to use custom data solution tools. So, if you have such skills, you might as well use them.
On the part of the investor and regular user, this tool comes in two forms: the paid and free versions. The ones you pay for are usually subscription services while the free ones are features on other platforms. The former of the two is what’s sought after the most because it lacks some of the limitations the latter has. These are as follows:
- The platform offering to screen may not be easy to use
- Free options may not have real-time data provision, which isn’t great for day traders
- They often won’t allow detailed information or a high amount of filter criteria needed for a desired tool
- May not possess the features necessary for a better experience
So, how would the average person go about using this tool? Unlike any stock API system that needs programming knowledge, here, it’s all about finding the right solution and going from there. Once found, a list of stocks, securities, and/or ETFs is presented. With the options presented, all a user has to do is enter as many filter criteria as is necessary and the screener will narrow down the search.
A brief example of how this would look like is an order to help you visualize things. Picture a day trader using the stock screener and they’re interested in stocks that pay dividends, in a specific country, on a particular index. They would input the country, followed by the index, after which a list of other, more technical criteria is entered, with the list continuing to narrow down.
What you need to know about these tools is that nothing is singled out. Based on your entries, numerous options are usually left behind, leaving any decision-making firmly in your hands. It’s important to do your research concerning the remaining options, which means trading as usual.
As already discussed, a stock screener serves as a search instrument designed to assist investors and traders in identifying stocks that align with specific criteria. The tool empowers users to explore and check stock rates by considering different factors, for example, market capitalization or price-to-earnings ratio and other metrics.
It's crucial to mention that not all stock screeners offer the same functionalities, so the variations exist. So platforms usually provide this solution as a free feature, but those often won’t suffice, which is why all the best ones are paid for. As every tool is different, the layout of each will likely vary as well as the price attached and their features. Let’s look at a few new features available on the market:
- Artificial Intelligence: some tools are known for providing AI solutions that can enable the swift screening of hundreds of stocks.
- Customization: users have the ability to customize criteria based on their preferences and strategies.
- Live Trading Room: this feature allows traders to engage in real-time discussions and interactions.
- Location/International Coverage: it can cover stocks from specific geographic indexes, also you can find the ability to screen a broad range of international stocks.
- Data Limitation: one drawback of such tools could be the limited availability of historical data for analysis but not with the Finage services.
- Comprehensive Screening Criteria: users can get different criteria, including factors related to growth and dividends.
- Chatrooms: here, traders can interact in real-time, discussing stocks. While this tool could be attractive, its one drawback is the fact that past data isn’t heavily featured in some tools.
Here are also attributes that improve the proficiency of a stock screening through APIs (Application Programming Interfaces):
- Stock Last Quote: Latest stock price
- Multiple Last Quotes: Multiple stocks' latest prices
- Last Trade: Recent stock trade
- Trade Ticks: Detailed trade information
- Multiple Last Trades: Recent trades for multiple stocks
- Historical EOD Data: Past daily stock data
- Historical Order Books: Past stock order data
- Market Aggregates: Aggregated market data
- Market Previous Close: Previous day's close
- Price Changes: Stock price fluctuations
- Snapshot: Current stock overview
Sifting through an over 3600 stock list like any US market is impossible to do efficiently today. That's why such tools will be of great help. With it, not only are you able to customize your search, the results will be given in real-time.
While there's no doubt that the tools are helpful, they can only do so much. As such, after the screener has done its job, you'll have to conduct your research on each of the options the system has narrowed down to. The same due diligence is needed to find the right solution. In short, caution is always going to be needed irrespective of how convenient a tool is.
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