Back in the day — when I was learning how to trade penny stocks and slowly building my account from $12,415 to $120,000** — I skipped classes to hang out in the high school library. The computers there had the fastest internet connection around.
One of the librarians was on my side; he knew what I was up to and recognized my passion. He even helped me get on a computer when a teacher was running a class in the computer lab! He said something like, “This kid needs to get on a computer to complete an urgent project.”
The teacher kicked one of her students off so I could research the market …
Ah … the good ol’ days, right?
It was hard work. Multiple computers with browsers open to finance message boards and intraday stock quotes …
… looking up SEC filings, earnings reports, and press releases on slow computers with slow internet by today’s standards.
I don’t begrudge the time I spent learning. I learned tons and I loved every minute of it — which is something I often hear from my students. But I don’t want to go back to that way of doing research. I’ll take a modern stock screener any day of the week.
Table of Contents
- 1 What is a Stock Screener?
- 2 How to Take Advantage of a Stock Screener
- 3 Key Features From a Stock Screener Software
- 4 What’s My Favorite Online Stock Screener?
- 5 The Bottom Line
What is a Stock Screener?
A stock screener is a tool that lets traders filter or ‘screen’ stocks based on specific criteria. Stock screeners make a day trader’s life a helluva lot simpler than the old days. You still have to do your homework, but you can set screens to create your watchlist.
When Should You Use a Stock Screener?
Er… Every friggin’ day! At the very least, every day the market is open. And then you should study on the weekends when the market is closed — so you should be using a stock screener every day. I’m not kidding: Use a stock screener every day.
You should use a stock screener when you’re building your watchlist each day. How else are you going to sift through the thousands of stocks out there? If you want to compare notes, sign up for my weekly watchlist and I’ll send you some hot stocks I’m watching every week.
Don’t just sign up for my watchlist for hot stock picks, though. That’s a lazy move — you can’t cheat success. Use the watchlist I provide to get an idea of what to look for and what I’m watching, then go and make your own. Later in this post, I’ll explain more about how to screen stocks for your watchlist.
Benefits of Trading With a Stock Screener Software
Here’s where modern technology gets awesome. If you use a top quality trading platform — like StocksToTrade — it will have built-in stock screener software.
So what’s the deal? Why should you use a stock screener? First and foremost, it’s gonna save you time. Especially if you’re trading penny stocks. Sometimes finding information on these stocks is difficult. With a stock screener, you have an advantage.
How to Take Advantage of a Stock Screener
Once you have access to a screener, you need to understand how to screen stocks. You could lose hours — or days — of your life trying to figure out what criteria to look for with the screener.
There are so many things you could look for… but only a few things really matter in any given market. Let’s focus on those for today. (Don’t think this means you can stop studying!)
By the way, even if you aren’t set up with a trading platform yet, there are some free stock screeners out there. The finviz stock screener is good (although the information is delayed unless you pay for a premium service). The Yahoo stock screener mentioned below is also a decent free tool.
Analyzing Price Performance With a Stock Screener
One of the basic things I look for in stocks is price performance. I don’t want to trade something that’s not on the move. If I buy shares in a stock and the price movement doesn’t match my thesis, I get out. I have this saying: When in doubt, get out.
Here are two things I look for in price performance: big percent gains and big dollar gains.
Big percent gains are pretty easy to sort with almost all stock screeners. If you want to see how it works, head on over to the Yahoo stock screener on the Yahoo Finance website:
- Scroll down a little to see the built-in Yahoo Finance Screeners.
- Click on Day Gainers.
You should see a list of big percent gainers from the last trading day (or today if the session is open). Cool, eh? Look at the top stock on the list. There are columns for price, price change, percent change, volume (keep this in mind), 3-month average volume, and so on.
You do realize this means you have no friggin’ excuse — ever again! — for not using a stock screener to search for stocks, right? I would let you off if you’re somewhere without internet. But you’re reading this so that’s a BS excuse. You can do this on your phone!
Penny stocks can have huge percent gains in a very brief timespan. That’s why I like to trade them. Why trade boring stocks where a $1 move is only 2% when you can trade a stock where $1 price difference is a 20%, 30% — even a 100% gain?
In this scenario, big percent gains happen when low-priced stocks skyrocket fast. Big dollar gains, on the other hand, happen more often with higher-priced stocks. (For our purposes I’m still talking about stocks under $10 per share.)
Maybe a $3 stock has good earnings news, the sector is hot, and they announce a deal with a big company all at the same time. Suddenly that stock could shoot up to $10 or $15. That’s a big percent and big dollar gain at the same time.
Using a Stock Screener to Analyze Volume and Volatility
If you’re serious about trading penny stocks, then you’ll have to pay extra attention to volume and volatility. Those two indicators walk hand in hand when it comes to price action. What do I mean by that? High volume stocks are more volatile — especially in penny stocks.
That’s why I use a penny stock screener that scans for volume and volatility. Caveat: Even though volume and volatility are standard scans, not all stock screeners are good for penny stocks! Some stock screeners include OTCBB (over-the-counter-bulletin-board) or pink sheet stocks but don’t have all the information you need to trade.
Pay attention! I’m going to tell you about the one stock screener to rule them all (any J.R.R. Tolkien fans out there?) in a moment. Whatever you use, make sure it’s easy to get volume and volatility numbers.
You need a stock screener to scan for many criteria, including volume, volatility, price action, news (the most common catalyst), and chatter. ( ? Keep reading … )
Technical and Fundamental Indicators
When you turn on CNBC you’ll hear the terms technical and fundamental a lot. Which should you be paying attention to?
First, I’m gonna jump the gun here a bit and say keep studying. Study hard, build your knowledge base, and keep at it. Never stop learning. I’m still studying after two decades of trading and a decade of teaching.
Now I can give you a more complete answer to this question …
As a penny stock trader, I’m not as interested in company fundamentals as someone who buys stocks to hold. I’m much more interested in technical analysis — especially to determine entry and exit points and to see patterns.
Still, it’s good to know some of the company fundamentals. Just not every detail like a Warren Buffet type player wants to know. Those guys are all about quarterly reports and financials — and they take in every word. They want to know every detail because it fits their strategy.
I want to know the basics. What does the company sell? Are there rumors about upcoming product releases? Have they signed a deal with a big billionaire investor, like a Mark Zuckerberg or a Peter Thiel?
Remember, most of these companies are going to fail — you want to play their stock when it moves. But it’s a good idea to know what they do so you understand whether news is good or bad or indifferent. That’s not to say your expected price action will happen. It’s not an exact science.
Back to technical indicators. This is where most of my focus lies. I use a technical stock screener to find stocks that meet the criteria I’m looking for. If you are a newbie you might think I buy a stock as soon as I see something interesting. Not the case at all!
I use the stock screener to find stocks to watch. Before a trade, I get enough additional information as necessary to form a thesis about the stock. Once it’s in play, I look for confirmation of my thesis. If my thesis gets busted, I’m out. When in doubt, get out. Cut losses quickly!
Locate Low Floats Stocks
Another thing I look for is low float stocks. What are low float stocks? They’re stocks with a low number of unrestricted shares available to trade. Strong catalysts in low float stocks can create big price swings as buyers and sellers compete for control of the market.
This comes down to the law of supply and demand. For example, say some crappy little software company announces a big deal with Apple. That news catalyst creates demand, which makes the price of the stock go up because there aren’t that many shares available.
So you need to have a low float stock screener as part of your bag of tricks. Of course, ideally, you’ll have a screener that does all of this in one go. One stock screener to rule them all …
Key Features From a Stock Screener Software
Over the years I’ve tried almost every stock screener and trading platform out there. Here’s a list of key features you should look for in stock screener software.
Winning Strategy Scan
Most of my wins have come from a few strategies. There are some stock screeners out there that have pre-built screens based on winning strategies. That’s the case with StocksToTrade, which I’ll tell you more about in a minute.
I want you to become a self-sufficient trader. You should want that as well. One of the best things you can do is keep a trading journal. If you do that, you’ll notice which things are working for you and which are not. Pay attention to your winning strategies.
Once you have a winning strategy, you should set up a custom screen — a winning strategy scan — for your strategy. Make sense? If you could get your hands on a day trading stock screener that has all of the screens built in you’d be golden, right?
Percentage Gainers Screener
This screener will tell you what’s on the move so you can add them to your watchlist. Most stock screeners have this built in. Remember, big percentage gainers match only one criterion. You’re looking for stocks that match all of your criteria, such as high volume and a recognizable news catalyst.
New Daily High List
All the best stock analysis websites show intraday trading range. That’s the price range from the day’s low to the day’s high. One of the things I look for when trying to find stocks with breakout potential is a new daily high. If the catalyst is powerful and there’s enough volume, the stock can keep running up once it’s broken through.
Dynamic Charts With News Indicators
Your stock screener should have dynamic charts with the ability to change the time frame for the chart. You also want the ability to add technical indicators if you use them and the ability to relate news to the price action you see.
Watchlist Filtered News
This is huge for a penny stock trader. You want a criteria-based news streamer filtered to stocks on your watchlist. Then you can get alerts for specific news events that trigger price action. Ten years ago you had to subscribe to several different sites — often paid sites — to access this level of research. Today you can get it all in one place.
What’s My Favorite Online Stock Screener?
Hands down, bar none …
My favorite stock screener for day trading is StocksToTrade (STT). I use this software every day. With the new brokerage integration, you can literally do everything with Chrome and STT.
I could go on a rant about why you should sign up for StocksToTrade, but it would take a long time. It might go on so long it would take you 20 minutes to read. Instead, I’ll let you use that time to get acquainted with STT just as soon as you finish this article.
StocksToTrade has — built right into the platform — a lot of the scans I’ve been using for the past two decades. I even helped design this software! We built it because I was sick and tired of having to log in to a bunch of different sites and tools to get the information I needed.
Why go through all that trouble when you can click a few buttons and it does the scan for you? Why jump around from your stock screener to your brokerage account if you can place your order in the same place?
There are earnings winners scans, big percent gainers, big dollar gainers, news scans, scans …
… Yes, scans!
This is badass. Did you know is an awesome place to find out what other traders are watching? Traders like me Tweet about trades and stocks almost every day. So if you go over to and put in some tag about a penny stock — let’s say a weed stock like $POTN — you’re going to find a whole slew of useful information.
You can do it all — right from StocksToTrade. Even better, you can combine news with other criteria such as percent change, volume, and float to match your trading strategy.
So I don’t want to hear you ask “what scans should I be using?” any more, got it? All kidding aside, I firmly believe there’s no other trading platform with a smarter penny stock screener than StocksToTrade.
The Bottom Line
If you want to trade stocks, a stock screener is one of the most important tools in your arsenal. It will help you sort through thousands of stocks to find only those that match specific criteria and your trading strategy.
Hopefully, now you have a better idea how to use one — and a clear understanding of why they’re not all created equal.
Are you a trader? How do you use a stock screener to increase your chances of success? Newbie? Let me know what you’re going to do today to start your journey. I love hearing from you!