Stock market research is a crucial aspect of investing for anyone who likes to take an active role in their trading. Without good, accurate research, it is hard to make decisions about stocks, but at the same time, spending a lot of time on research is counterproductive. If it takes you a long time to learn about a stock, then by the time you complete your research and come to a decision, the context has changed. This is especially true if you are an active and frequent trader, because in that case you need to be able to make decisions as quickly as possible.
That is where stock filters or stock screens come in.
They can help you narrow the field based on criteria that you select, giving you better control over your options and shortening the time you need to complete research.
The way these stock filters work is simple. The first thing you need to do is decide on some criteria to use to filter out stocks. For example, you might want to cut out stocks that are below their 15-day average. Using your trading platform and filter software you simply enter that criteria. The software will remove from consideration all stocks that do not fulfill the filter’s condition.
Time Saving Software
It’s a simple idea that can save you hours. Using a few filters can automatically eliminate hundreds of stocks at a time that you would otherwise need to comb through and dismiss by hand. During that time, stocks can gain or lose, and the whole market can shift. Being able to capitalize on research as soon as possible and ahead of everyone else is key to making trades that will result in profit.
In addition to saving time, filters can also reduce your rate of errors. If you are mentally keeping in mind several different criteria, you are likely to accidentally dismiss stocks that fulfill your conditions or accept those that do not. With a filter, you are forced to be highly specific and technical about what you want, giving you clarity as well as ensuring that the pool of potential stock picks you see is true to your wishes.
The organization and automation of a good set of stock filters totally changes the experience of picking stocks. It becomes a faster and more direct experience, with research being shorter and more productive than without a filter. If you often use technical criteria to find stocks, consider using filters to speed up the process.