Scan, Spot, and Trade: Maximizing Profits with Intelligent Stock Scanning

Photo of author

By Jacob Maslow

Finding stocks worth trading is one of the most difficult and time-consuming aspects. The sheer volume of companies and stocks makes settling on a good stock difficult, and the volumes of data and information online don’t make things any easier.

That’s why a stock scanner can come in handy. A stock scanner can help you focus on stocks that suit your strategy and meet your unique parameters. Ideally, these scanners work well when you know the companies you want to invest in. This post discusses properly using stock trading scanners to spot better trades and maximize profits.

What is a Stock Scanner?

A stock scanner is a software for finding stocks based on your criteria. The scanner looks through countless stocks and whittles down to dozens of stocks that fit your parameters. Here are some of the best stock screeners of 2023

Ask the scanner to find stocks that make all-time highs or anything else you want to see, and every stock that fits your desired criteria will be presented to you. Without a scanner, you’d have to go through a never-ending stream of charts, analyzing them based on ratios, countries, momentum, and strategies. This could be overwhelming.

The good thing about stock scanners is that they’re highly customizable and can be as basic or complex as you want. For instance, a simple stock scanner could narrow the list of available stocks to stocks that trade on the NYSE. Or you could have a complex scanner that searches a subset of stock within specific technical and fundamental attributes.

The range of criteria you can set to filter stocks is vast. The scanners allow you to filter stocks based on fundamental characteristics, such as revenue, debt, or capitalization. You can also base your search on technical characteristics, such as whether the trading volume is smaller or greater than normal.

Stock scanners can be great tools for discovery. If you’re like many traders who don’t use stock scanners, you probably focus on a subset of companies day after day. With a stock scanner, however, you can identify stocks that meet your strategy and parameters, which could be good trading candidates.

Get a scanner to save time and effort and help you reach your investment goals.

Types of Stock Scanners

There are four basic types of stock scanners. Finding the right one for you will depend on the stocks you plan to trade and the strategies you plan to use. Let’s take a look at these scanners.

  • Fundamental stock scanners: These scanners help find stocks based on certain fundamental criteria, such as ratios, metrics, profit margins, return on equity, and earnings per share.
  • Technical stock scanners: These scanners look for price patterns, price action, trading volume, and indication triggers.
  • End-of-day scanners: End-of-day or post-market analysis involves analyzing stock actions after the trading session hours. This focuses on stocks with noticeable spikes in trading volume, the top percentage of gainers and losers, and more. These scanners are meant to help plan for the next trading session.
  • Intraday stock scanners: These work to analyze the real-time action of stocks. They require a more robust scanning program; you must analyze data quickly. Day traders get the most benefit from intraday scanners.

How to Use Stock Scanners

The proper use of trading scanning software depends on what you’re using it for. While a scanner provides potential candidates to trade, you must apply your strategies once the candidates are validated.

To get the most use out of your stock market scanner, you need to build a watch list to monitor new stocks to get acclimated to the pace of price action, liquidity, spread, and volume. It’s also important to ensure your parameters are properly set to generate accurate results.

Key Takeaways

Stock scanners are software that makes it simple to curate high volumes of stock based on your specific parameters. The goal is to improve your odds of finding quality trades.

Images Courtesy of DepositPhotos