Learn How to Use a Technical Stock Screener
A technical stock screener filters a list of stocks down to the ones whose price and volume behavior match rules you set, such as "price above its 200-day moving average," "14-day RSI below 30," or "today's volume at least twice the average." To use one: choose the rules that express your strategy, run them across your universe of stocks, then review the charts of the stocks that pass before deciding on a trade.
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Technical analysis, the method behind these screens, studies past price and volume to judge likely trends; it is different from fundamental analysis, which studies a company's financial statements. The sections below cover the common building blocks of a technical screen and how to run one with MarketXLS.
How to use a technical stock screener
- Define the setup you trade, for example an uptrend pullback or a breakout.
- Translate it into rules: trend (price above the 50- and 200-day moving averages), momentum (RSI in a range), volume (above its average) and liquidity (minimum price and average volume).
- Run the screen on your universe, such as the S&P 500.
- Review the results on a chart and check news or earnings dates before acting.
- Re-run regularly, since results change as prices move.
Fundamental Analysis
In stock trading, the fundamental analysis involves studying a company’s financials, such as its balance sheet, income statement, and cash flow statement. Fundamental analysts try to view stocks based on the underlying value of the company’s business. Fundamental analysis can be used to predict overall market trends as well as individual stock prices.
Trading Strategies
The trading strategies involved in technical analysis are usually based on spotting price patterns, such as head and shoulders, double tops and bottoms, triangles, wedges and flags. By studying these patterns, traders gain insight into possible price movements and can use this information when making trades.
Candlestick Patterns
Candlestick patterns are graphical representations of stock prices on stock charts. They are recognized by their shape and can be used to identify potential reversals in market trends. By looking at the shape, traders can get an idea of where the price of the stock is headed next.
Spotting Trends
To be successful with stock trading it is essential to be able to spot and follow trends. By looking for stocks that are trending in a particular direction, traders can make informed trading decisions. This can be done by looking at moving averages, which provide a visual representation of the price action of a particular stock over a given period of time.
Stock Selection
Stock selection involves researching individual stocks in detail to determine which may be most suitable for trading. This involves looking at metrics like market capitalization, debt-equity ratio, earnings, and other metrics. Traders use this information to select stocks that fit their trading strategies.
Stochastic Indicators
Stochastic indicators, or oscillators, are used to identify overbought and oversold stock prices. They are based on the concept that the high point of a stock’s price tends to be followed by a drop, while the low point of a stock’s price tends to precede a rise in price. By studying these indicators, traders can make more informed trading decisions.
Moving Averages
Moving averages are used to identify trends in the price action of a particular stock. The moving average is calculated by taking the average price over a specified period of time, such as 10 days or 30 days. By looking at a stock’s moving average, traders can identify potential entry and exit points.
MarketXLS
MarketXLS lets you run a technical screen in two ways. The MarketXLS stock screener filters stocks by rules on the website, and the MarketXLS Excel add-in returns indicator values as formulas, so you can build your own screen in a spreadsheet: list tickers in a column, add =SimpleMovingAverage("AAPL", 200), =RSI("AAPL") and =Volume("AAPL"), then filter the columns with your rules. Check out the MarketXLS Features Showcase to learn more about MarketXLS.
Here are some templates that you can use to create your own models
Kirkpatrick Value Screen
Kirkpatrick Growth Screen
Search for all templates in the MarketXLS templates library.
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