Finding good stocks to pick for swing trading isn’t always easy. This is when a stock screener can be quite useful in narrowing down your choices to choose the right stock for your investment strategy. In order to find the best stock screener for swing trading, it’s important we understand what they are, how to best use them for your needs, and what makes one better than another.
What is a Stock Screener?
A stock screener is basically a tool which will help you search for companies that meet your criteria for investing in. In this case, we are looking for good stocks for swing trading.
Stock screeners are basically a large database of companies and a “search” function that allows you to set certain variables and criteria to narrow out your choices. It will then provide you a list of companies that match your search criteria.
The Top Free Popular Screeners
It shouldn’t be surprising that the popular free stock screener choices are run by Yahoo! Finance, MSN Money and another company called FinViz. These three are free to use, though that does not necessarily mean they are the “best” – the most important thing is that you understand how to analyze the data in order to make an informed decision and educated guess for which stocks to pick.
Understanding the Variables of a Stock Screener for Swing Trading
Using the Yahoo! Finance free stock screener, you will find that you can search by industry (such as Biotechnology or Electronics or Grocery Stores for example) as well as a number of other variables.
Here is a list of common variables you will find:
- Index Membership
- Share Price
- Market Cap
- Dividend Yield
- Sales Revenue
- Profit Margin
- Price/Earnings Ratio
- Price/Book Ratio
- Price/Sales Ratio
- Price/Sales Ratio
- Estimated 1 Year Earnings Per Share Growth
- Estimated 5 Year Earnings per Share Growth
- Average Analyst Rec
Now, before you can even *think* about using any of these stock screeners or worrying about truly which ones are the best for swing trading, you absolutely must be familiar for what these terms are and what indicators should exist for you to be interested in swing trading a stock.
This is why it is very important to learn as much as you can before you start investing in the stock market. It is far too easy to get caught up in the rush of trading and the hype of a stock. By understanding these terms and what indicators make for a good swing trade, you’ll be able to find your own stock picks in no time.
The Best Stock Screeners for Swing Trading Depend on Your Strategy
Your own unique strategy is what will influence what makes a stock screener tool useful to you or not.
For example, let’s say your strategy for choosing stocks to swing trade is to look for large cap stocks to invest in. Large cap stocks are companies which have a market capitalization value of more than $10 billion. These companies are the “Big Dogs” and well known brands you likely hear about or even use yourself every single day. For example, Microsoft is a “large cap stock”.
While this is not a sure-fire strategy for choosing stocks to swing trade, these large cap stocks do tend to have dramatically defined highs and lows.
By putting our criteria for $10 billion minimum in the market cap box in the Yahoo! Finance stock screener, the results show us that the company 3M (Ticker Symbol MMM) may have some potential.
However, the results given through the Yahoo screener are very limited – and so it is definitely not the “best” in this instance by any means.
Instead we turn to FinViz.com, which gives us many more stock symbols to research and consider.
One of the stock results generated by FinViz was the company AbbVie Inc. (Ticker Symbol ABBV) – this one also looks at the time of writing today as if it could be a promising swing trade stock – though of course you will always want to do your own due diligence and determine your own stock picks as there is risk with ALL trading.
While there are many stock screeners available to use today, some which are more specialized than others, you will find them to be quite a helpful resource as you learn more about trading stocks and investing. As always, the best thing you can do is keep an eyeful watch on the stock market and of course be sure to carefully research any company you are considering researching in.
Do you have any favorite stock screeners for swing trading? Share your thoughts in the comments below or join the discussion on our stock message forums.