Stock scanners explained
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In an era when you are fed with volumes of information barging at you, zeroing on a good stock isn’t an easy task, hence stock scanner becomes an invaluable tool for any trader. This not only sorts out valuable information from all the data available but also refines thousands of potential stocks to a few hundred or even dozens based on your scanner parameters.
What exactly are stock scanners?
In the world full of the market, scanners are tools that help you filter stocks on pre-defined metrics. This helps us select the right instruments that exactly fit our trading criteria. The scanners can be for fundamental analysis or technical analysis. Filtering stocks on basis of market capitalization (mcap), P/E ratio (Price to earnings), the dividend paid can be classified as a fundamental scanner whereas filtering stocks on basis of price action, indicators are done with the help of a technical scanner.
Fundamental scanner generated data promises less accuracy as the financial data can be window-dressed to some extent whereas technical scanners work best as it entirely depends on the price movement of the stock.
Scanning is different from Backtesting
In Backtesting, the strategy used relies on historical data to study a stock’s previous behavior and predict future movements. In scanners, the algorithm uses a mix of historical data and near-real-time data according to the time interval to scan stocks that meet the parameters of a specific search.
What is an advanced stock scanner?
There is no discrete definition of what an advance scanner is, but different scanners have various features that are mode advanced and provide accurate data, which eases the process of finding the winning stock. Streak, an advance scanner also lets you customize your fields. Active traders may also want to zero in on technical indicators like moving averages, Beta, volatility, and performance measures. Here’s an illustration that will guide you through creating a scanner with ease.
Finding a needle in the haystack
In a new scan, You can choose to pick your winning stock from Nifty 50, Nifty 100, Nifty 500, MCX, CDS, Energy across sectors while capping the time frame between 1 Minute to 1 Day. The Chart Types available for screening includes Candle Sticks, Heikin Ashi, and Renko
Conclusion
There are about 1000s of the stock listed on the exchange, picking the right stock can feel a lot like finding a needle in a haystack. Basic stock scanners look at some key metrics that typical investors care about. Advanced stock scanners take things a step further and give you more granular control when hunting for your next winning stock.
If you have the right tools in hand, sorting through all that hay doesn’t have to be hard. And the same is true with your investments. Use the right tools, and your new favorite stock doesn’t have to be elusive. Streak is the world’s first retail trading platform that allows users with zero coding skills to create, backtest, and deploy their strategies.
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Getting started with stock scanners (Part 1) was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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