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How to Use Stock Scanners for Trading: A Definitive Guide

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Written by Timothy Sykes
Updated 9/16/2023 12 min read

In the trading world, where information is king, stock scanners are your eyes and ears. Too many traders don’t know this — which is like trying to trade with one eye closed.

But what are stock scanners, and how can you use them to improve your trading?

There are dozens out there, both free and paid … which is right for you? Let’s dive in and find out.

What are Stock Scanners? A Quick Overview

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Stock scanners, also known as stock screeners, are powerful tools that traders use to filter through thousands of stocks in the market. They’re like a search engine for stocks, allowing you to input specific criteria such as price, volume, and market cap to find trading opportunities that match your strategy.

For example, if you’re a day trader looking for volatile stocks, you might set your scanner to find stocks with high trading volume and significant price movements. On the other hand, if you’re a long-term investor, you might use a scanner to find companies with strong fundamentals and steady growth.

As you delve deeper into the world of trading, it’s crucial to familiarize yourself with the tools that can streamline your process. One tool that your scanner should have is hot keys, which can significantly enhance your trading efficiency by allowing you to execute trades quickly and accurately. Hot keys are customizable keyboard shortcuts that can be set up on your trading platform to perform various actions, such as buying or selling a stock, cancelling orders, or even setting stop losses. This can be particularly useful in fast-paced trading environments where speed is of the essence.

To learn more about how hot keys can improve your trading experience, check out this comprehensive guide on hot keys.

Exploring the Benefits of Using Stock Scanners for Trading

Stock scanners offer a range of benefits for traders. First and foremost, they save you time. Instead of manually sifting through data and charts for thousands of companies, you can use a stock scanner to do the heavy lifting. This allows you to focus on analysis and strategy, rather than data collection.

Second, stock scanners provide a level of precision that’s hard to achieve manually. By setting specific criteria, you can find exactly the kind of stocks you’re interested in, whether that’s small-cap tech companies with high growth potential or blue-chip stocks with stable dividends.

While stock scanners are a powerful tool in their own right, they are most effective when used in conjunction with a reliable trading platform. A good trading platform will not only provide you with a robust stock scanner but also offer other essential features such as real-time quotes, advanced charting tools, and a user-friendly interface.

It’s also important to choose a platform that suits your specific trading style and needs. For instance, day traders might prefer a platform with fast execution speeds and low fees, while long-term investors might prioritize a platform with extensive research tools and a wide range of investment options. To help you make an informed decision, here’s a detailed review of some of the best trading platforms for day traders.

Classifying Stock Scanners: A Closer Look

There are several types of stock scanners, each with its own advantages and features.

There’s one stock scanner that I use in every situation…

StocksToTrade is a stock scanner that integrates with most major brokers. I helped to design it, which means it has all the stock screening capabilities that traders like me look for in a platform.

I also use StocksToTrade to scan for news, tweets, earning reports, and more — all covered in its powerful news scanner.

Grab your 14-day StocksToTrade trial today — it’s only $7!

Just because it’s the best scanner for traders like me doesn’t mean it’s the best scanner for you. Here are some of the different stock scanners you can use:

Fundamental Criteria-Based Scanner: Unraveling the Essentials

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Fundamental criteria-based scanners allow you to search for stocks based on fundamental analysis metrics such as earnings per share (EPS), price-to-earnings (P/E) ratio, and dividend yield. These scanners are particularly useful for long-term investors who base their decisions on a company’s financial health and growth prospects.

Technical Criteria-Based Scanner: A Technical Perspective

Technical criteria-based scanners, on the other hand, focus on technical analysis indicators like moving averages, support and resistance levels, and MACD. These scanners are a favorite among day traders and swing traders who rely on chart patterns and technical indicators to make their trading decisions.

Real-Time Scanner: Embracing the Speed

Real-time scanners are a boon for day traders. These tools scan the market in real-time, providing up-to-the-minute information on price movements, trading volume, and other key metrics. This allows traders to react quickly to market changes and seize trading opportunities as they arise.

Intraday Stock Scanners: Making the Most of Market Hours

Intraday stock scanners focus on the action happening during market hours. They’re designed to help day traders find stocks that are moving significantly during the day, based on criteria like volume spikes, price changes, or breaking news events.

Post-Market Stock Scanners: Leveraging After-Hours Opportunities

Post-market stock scanners, as the name suggests, are used to scan the market after the regular trading hours have ended. They’re useful for identifying stocks that have made significant moves in the after-hours market, which can often be a precursor to movements during the next trading day.

A Step-by-Step Guide to Using a Stock Scanner for Trading

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Here are the steps to scanning with purpose! Over my 20-plus-year trading career, I’ve done all the research…

Here are my best tips, in numbered order:

Step 1: Choosing the Appropriate Stock Scanner: Factors to Consider

Choosing the right stock scanner is crucial. Consider factors like:

  • Features
  • Cost
  • Add-on products and services
  • Performance
  • Does it have a website, desktop platform, and/or mobile app? This can make a real difference for your stock scanner strategy

For me, the choice is easy in any situation…

Step 2: Identifying Your Investment Goals and Trading Strategies

Before you start scanning, it’s important to have a clear idea of your investment goals and trading strategy. Are you a day trader looking for short-term price movements? Or a long-term investor seeking steady growth? Your goals will determine the criteria you set in your scanner.

Step 3: Selecting the Appropriate Parameters to Set the Criteria for Your Search

The parameters you set in your scanner should align with your trading strategy. For instance, if you’re looking for momentum trades, you might set your scanner to find stocks with high trading volume and significant price changes. If you’re a swing trader, you might look for stocks with certain candlestick patterns or Fibonacci retracements.

Determining the Criteria for Good Scan Results

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As you refine your scanning criteria and start identifying potential trading opportunities, it’s important to have a solid understanding of the basics of day trading. This includes knowledge of different trading strategies, risk management techniques, and the ability to analyze market trends and indicators. Day trading is a skill that requires practice and continuous learning, but with the right approach, it can be a profitable venture.

If you’re new to day trading or looking to brush up on your skills, this guide on day trading basics is a great place to start.

The markets will be the ultimate judge, mind you…

Make sure you have the following content in place before you try anything involving real money!

Parameter and Trigger Settings: A Guide to Precision

Setting the right parameters and triggers in your stock scanner is key to getting useful results. This involves specifying the criteria that a stock must meet to be included in your scan results. For example, you might set a parameter for stocks with a market cap above a certain threshold, or a trigger for stocks that have crossed a specific moving average.

Quality Over Quantity: Why it Matters

When it comes to scan results, quality trumps quantity. It’s better to have a handful of stocks that precisely meet your criteria than a long list of loosely fitting candidates. This is where the precision of your parameter and trigger settings comes into play. The more specific your criteria, the more targeted your results will be.

Segment Custom Scans to Your Niche: A Tailored Approach

Customizing your scans to fit your niche can significantly enhance your trading efficiency. For instance, if you specialize in trading tech stocks, you might set your scanner to focus on the Nasdaq. Or if you’re interested in small-cap stocks, you might set a parameter for companies with a market cap below a certain level.

Scanning for Stocks with Significant Price Movements: An Effective Strategy

One effective strategy for using stock scanners is to scan for stocks with significant price movements. This can help you spot potential trading opportunities. For example, a sudden spike in trading volume could indicate that a stock is about to break out, while a significant price drop could present a buying opportunity.

Key Takeaways on Using Stock Scanners for Trading

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Stock scanners are powerful tools that can save you time, provide precision, and enhance your trading efficiency. By understanding how to use them effectively, you can find high-quality trading opportunities that align with your strategy.

Trading isn’t rocket science. It’s a skill you build and work on like any other. No matter the goals you have in mind, smart trading can help you get there. Trading has changed my life, and I think this way of life should be open to more people…

I’ve built my Trading Challenge to pass on the things I had to learn for myself. It’s the kind of community that I wish I had when I was starting out.

We don’t accept everyone. If you’re up for the challenge — I want to hear from you.

Apply to the Trading Challenge here.

Trading is a battlefield. The more knowledge you have, the better prepared you’ll be.

What scanner do you use? Let me know in the comments — I love hearing from my readers!

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”