Personal Finance. Money. Investing.

What is an Advanced Stock Screener?

Stock screeners help investors select appropriate stocks according to the investor’s chosen criteria. Advanced screeners give you more control

Posted: 5th November 2021 by James Gardner
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If you go to the doctor complaining of severe joint pain in the knees, the doctor will likely take you through diagnostic screening questions to see if your symptoms meet the criteria for various diseases, such as rheumatoid arthritis.

A stock screener is just like a diagnostic screener. As the investor, you answer questions based on your unique goals and portfolio, and the screener software spits back stocks that fit those criteria.

Just like with diagnostic screeners in medicine, screening stocks in this fashion is just one step in the process of finding the right stocks. You should always confirm your results by evaluating each stock’s fitness for your portfolio through your own research.

It’s also important to assess your financial situation and define your goals. As you can probably guess, this should happen before the screening stage, because your circumstances and goals will define your criteria.

To recap, here are the steps you should follow when screening for and selecting stocks:

  1. Examine your circumstances and define your goals
  2. Find stocks using a basic or advanced stock screener
  3. Confirm findings through your own research

Choosing a stock screener

As you can see above, you have choices when it comes to how comprehensive you want your stock screener to be. Some screeners offer both basic and advanced versions – typically with tiered pricing or by subscription – while others are either free/basic or advanced/customizable only.

In this article, we’ll cover the benefits of advanced stock screeners, how to use them, and what kinds of investors they’re best suited for.

What is an advanced stock screener?

Think of the difference between how Macs and PC computers are marketed:

  • Mac: Ease of use, good for beginners who don’t want or know how to make decisions about their computer’s operations and interfaces
  • PC: Operations and interfaces are highly customizable, giving you more control, but this requires more experience and knowledge. With great power comes great responsibility!

Basic stock screeners are the Macs here. They’re great for when you’re first getting started investing, because they offer standard, simple metrics, such as market cap, P/E ratio, gains/losses by time period, share volume, etc. The key takeaway is that both basic and advanced stock screeners are useful, but for different types of investors.

Why should I use an advanced stock screener?

If you’ve been in the stock game for a while, you might be ready to get more hands-on with your stock screening process. Because advanced stock screeners offer a wider range of customizable metrics, they give you the chance to apply all that knowledge you’ve been gathering in ways that are more tailored to your unique portfolio.

In other words, they give you more control.

Are there downsides to advanced stock screeners?

Think back to the Mac vs. PC example. If you don’t know a lot about computers, using a PC with highly customizable operations isn’t very useful to you, because you don’t know what any of the options mean. In fact, it will probably make it harder for you to use the computer!

If you’re new to stocks, get your feet wet with the Mac of stock screening: basic stock screeners. As you get more familiar with stock trading through experience, you’ll finetune your portfolio and financial goals, and you can decide at any time to get your hands a little dirtier with advanced stock screeners.

Recap: Primary cons of advanced stock screeners

  • Not good for beginners who know little about the different criteria
  • Typically focus only on quantitative data, so you’ll need to consider qualitative factors separately
  • Industry-specific blindspots

How to get started with stock screeners

TheBalance provides a great starter list of free and freemium (that is, free/basic and subscription/advanced options) screening software. Starting with free basic versions can be a great way to try out different screeners and find which one you like best, even if your goal is to eventually use an advanced screener.

Summary & takeaways

Remember, while stock screening is a crucial part of building your portfolio, it’s only one part of many. Follow the steps below to get the most out of both basic and advanced stock screeners:

  1. Define financial goals and criteria
  2. Use a basic stock screener (beginners) or advanced stock screener (veteran investors)
  3. Finetune portfolio through separate research, looking out for industry blindspots and considering qualitative factors not included in the screener

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