How to Program Stock Screeners
When it comes to investing in the stock market, the sheer number of stocks can be overwhelming. There are hundreds of thousands if not millions of companies that trade on exchanges throughout the world. That can seem entirely daunting for an investor who's trying to make some money on his portfolio. Here are some tips on how to program stock screeners so that you can block out the noise and find the companies that you want to invest in.
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Instructions
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Determine what kind of investor you are. A stock screener is only as useful as the person who is plugging in the requirements. Therefore, you must ask yourself what kind of investment you are looking to make. There are different types of investors, such as a value investor who seeks to find underpriced stocks, or a growth investor who seeks to invest in fast-growing companies that might not have the earnings yet to support their stock price. Determine the type of investment you want to make before proceeding.
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Understand the terms used on the stock screener. While many brokerages offer stock screeners that vary slightly, many of them use common terms, such as the price-to-earnings ratio (p/e.) This refers to the price per share of the stock divided by the earnings per share. Asset Class refers to the size of the company, with Mega Cap being on one end of the spectrum and Micro Cap being on the other. Industry sector means the industry the business operates in, such as technology, food services, or health care. Share price refers to the current share price of each individual stock. Price performance measures how a stock has done against another stock or industry. Familiarize yourself with these basic terms so that you may invest wisely.
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Adjust your stock screener accordingly. Now that you have familiarized yourself with the terms commonly found on stock screeners, adjust your stock screener so that you can see your investment results. You can continue adjusting different components of the stock screener until you are happy with the investment results.
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Tips & Warnings
Buy a stock over time. If you buy a stock all at once, you risk purchasing a stock at a high price. Split your money into thirds and buy the stock over the course of several months. You'll get more of a historically average price and manage downside risk.
Many brokerage accounts offer mutual-fund screeners that operate in the same manner as stock screeners.
References
- Photo Credit stock image by Michael Shake from Fotolia.com
