Investors need to regularly check the status of their chosen stocks to make important investment decisions. To aid them in doing this, technology has lent a helping hand, and a stock screener is one such technological creation.
What is a stock screener?
A stock screener is a tool that stocks investors use to identify stocks that align with their investment goals. Investors can select the metrics they want to evaluate a stock’s performance. A stock screener may also show company-related data, which can help investors understand the financial trend of the company’s stock they’re interested in.
Many stock trading app and platforms offer stock screeners as an in-built feature. Some stock trading platforms offer basic stock screeners for free, while others provide more advanced versions for a fee.
Why do investors or stockbrokers use a stock screener?
Besides the broad and general reason investors want to make informed decisions about their investments after opening a demat account, stock screeners are multipurpose and help investors and brokers in various ways.
- To save time:
An investor can easily spend anywhere from a few hours to a whole day by organizing financial data manually to do a comparative analysis of different stocks. A stock screener eliminates this manual interference and provides a valuable shortcut for investors to sift through many stocks and cherry-pick the ones that align with their investment objectives. Investors can save time by using a stock screener to focus on appropriate options for investment online instead of scanning through long lists of potential stocks.
- To compare stock performance:
Stock screeners can allow investors to compare the performance of stocks of different companies. Investors can set up their metrics and quickly get the data they want. Investors can analyze the relative strengths and weaknesses of different companies. This feature is useful in determining which stock has higher growth potential.
- To assess risk:
When people invest online in the stock market, they undertake a fair share of financial risk. By using a stock screener to identify stocks that meet specific risk parameters, investors can take a proactive approach to risk management. For instance, they can screen for stocks with a history of stable earnings growth or a strong dividend payment history. This can help investors build a portfolio that is better equipped to withstand market volatility.
- To diversify portfolio:
Diversification is an excellent strategy for managing risk at any online investment platform. However, diversification can be a time-consuming and challenging process. Stock screeners help investors identify opportunities in various sectors and industries using multiple filters and criteria, such as industry sector or geographic region. By quickly narrowing down the list of stocks, investors can efficiently select stocks from various industries and sectors that fit their investment criteria.
Stock screeners are a useful tool for investors at any level of experience. They enable investors to save time, mitigate risk, pinpoint opportunities, and make well-informed investment decisions based on unbiased analysis.