Every trader’s potential edge or perhaps a double-edged sword, stock scanners are undeniably more likely your ally on your journey to financial success.
However, traders need to understand some basics about their types and practical usage in order to use them. In the following article, we discuss what a stock scanner can do for you and how to use it properly.
What is a Stock Scanner?
Stock scanner is a specialized tool that has a purpose of helping investors quickly and successfully sort, search and organize stocks they’re interested in.
Today, you can easily find a stock scanner that is free to use and often incorporated into existing brokerage portals. Also, there are whole websites and pages dedicated to a particular options scanner, as well as independent platforms that specialize in this field.
Long-term investors can recognize a stock’s future perspective, while traders looking for opportunities can spot their chance as well (stock scanner for day trading). The search or filtering could be conducted by the criteria the traders themselves have developed or set up, which highly personalizes the search.
Keep in mind that however handy, helpful, and potentially profitable a stock scanner app may appear, it’s still a double-edged sword. That is especially the case if a trader doesn’t have a well-developed search methodology.
Stock Scanner vs. Stock Screener
After years of usage and improvement in both of these constructs, the difference between the two has been increasingly blurry. Today, one glimpse at both immediately suggests their connection and interchangeability.
However, to understand the original ideas behind their purpose and development, we have to look deeper into the basic principles and mechanisms, as well as their ultimate purpose.
Scanners
First of all, scanners are developed in such a way that they leave out from displaying all those stocks that do not match the criteria that were decided upon in advance. Therefore, the results presented are only those that are the exact match of the determined search standard.
Also, this tool, especially the day trading scanner, relies on displaying opportunities in the real-time flow, which helps traders quickly detect and make use of such trading contingencies. More frequently used by day traders, this tool allows traders to get alerted every minute or a few, depending on how often they want to open positions. Therefore, typical time frames for this tool are 1 minute, 3 minutes, and 5 minutes.
Screeners
While screeners may look highly similar to scanners, based on their surface functionality and display characteristics, evident differences do exist. Their complexity is reflected in employing more settings and precise configurations. Since screeners do not provide real-time data, they do not have the purpose of alerting traders about price fluctuations as soon as they happen.
In the eyes of the long term investors, screeners are valuable because they allow defining criteria such as capitalization, dividend yields and similar, in combination with indicators and charts. Thanks to that, the results of the process are extremely precise and concrete.
Different Types of Stock Scanners
Configured by traders and investors interested in promising stocks, these programs and apps can be used as highly advantageous strategy elements. In essence, we can differ between two elementary types of stock scanners:
- Data Scanners
- News Scanners
Data scanner uses criteria that are predetermined by investors. These are fundamental and technical particularities related to the company’s stock price changes and actions, as well as the financial statistics of the firm itself.
Stock news scanner, on the other hand, looks for events and details on companies that can affect the changes in price movements. They’re effective in the cases of live scanning or real time scans.
Fundamental Stock Scanners
This type of scanners allow users to scan for stocks of companies based on their financial data. By employing it, traders can identify which companies they’re most interested in and if these firms represent a good investment possibility.
The key principle on which fundamental stock scanners operate is predicting the price of a stock in the future by analyzing the fundamentals, hence their name. These fundamentals can be a company’s yearly or quarterly calculated revenue, market capitalization, cash flow, etc.
However, once the scanning is complete, traders must conduct their own research and investigate stocks separately. Eventually, after that is done, investors can identify a particular stock as the best investment option and allot their available capital accordingly.
Technical Stock Scanners
Technical stock scanners focus explicitly on mathematical computations and evaluations of the stocks to identify those that have the greatest investment potential. Especially useful to short and average (medium-term investors), these tools rely on data about the trading volume of a stock, how prone its price is to fluctuations, and its concrete value on the markets.
During the analysis and choosing the exact criteria, technical stock scanner users focus on moving averages, specific chart patterns, and similar factors. What every investor knows is that the more parameters they enter in their search standards, the more precise and corresponding results they will get.
Post-Market Stock Scanners
As its name suggests, this stock screener helps you identify and isolate stocks that move after the active market hours or, to be precise, when the markets are closed.
Although these scanners are especially useful in identifying new investment opportunities during these specific market hours, you should still not blindly rely on them. You can lose in a rushed investment, considering there isn’t much liquidity during these specific periods.
When using the after-hours market screener, your focus should be on building your watchlist for the next trading day. Paying particular attention to these specific products and their movement after the sun rises again could easily turn into your advantage over other market participants.
What Should I Do If I Was Scammed Via Fake Stock Scanner?
While there’s no such thing as the best stock scanner, you can do your due diligence and choose the tools or apps and platforms that suit your preferences, strategies, and expectations best.
Do not forget that it may come with a price, but for a start, you can always choose to rely on what is considered one of the best free stock screener – the screener TradingView offers on their elaborate website.
It goes without saying that many will try to offer you some exceptionally well-performing tools advertised as technological wonders. Do not believe those – they’re more likely fakes aiming to rob you. If it so happens that you put money into it and would like to dispute the purchase, our legal professionals are chargeback experts you can count on. Contact our chat agents for more details.
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