Stock screener tools are used by individual and institutional investors to filter a large universe of stocks to find ones that meet certain criteria.
This article provides information on what to look for in such a tool.
From an investor's standpoint the main use of a stock screener is to find those companies that meet a specific pre-defined set of criteria.
This criteria may be based on fundamental financial data about the company, such as liquidity ratios or change in liabilities.
It can also be based on technical price and volume data, such as percent price change over the last 30 days, or average trading volume above 5 million shares.
Finally, the screen can be based on technical indicators such as moving averages, MACD, RSI and many others.
The first thing you should look for is whether the stock screener captures all the data you need at the granularity level you require.
If you want to screen by fundamental performance criteria, for example, you want to make sure that the complete income statement, balance sheet, and cash flow statement data is available for every stock for the last 2 to 5 years.
Likewise, if you intend to screen by technical indicators then those values need to be calculated based on price and volume data which has enough history available for the calculations.
If you need annual, daily, or even intraday data it needs to be captured by the tool to do the screen.
Next, think about how the stock screener allows you to set up filters and rules.
The rule interface can be check boxes, drop down lists, or freeform text fields.
Do you need to learn formulas or a script syntax? Or is it in plain English? Can you create simple and complex rules? Can you combine rules such as "price earnings ratio greater than 15 and MACD less than zero?" or "weekly closing price above 10 weeks ago and daily open price less than 5 days ago?".
Can you save and categorize your rules and filters? This type of flexibility enables you to do powerful screening based on a variety of strategies to isolate excellent candidates for investing or trading.
Finally, is the software interface easy to use and pleasant to work with? Can you get to the information you need quickly? Can you set up new screens easily? Can you drill down into the underlying data? Can you export the results and data into text or Excel files? These things really help with usability.
A dedicated stock screener with proper connections to capture data from publicly traded stocks around the world is a highly effective tool for both individuals and professionals.