Stock Screening 101: The Ultimate Guide to Finding Trading Opportunities

What Is Stock Screening?

Stock screening (or stock scanning) is the process of filtering thousands of securities to find those that meet specific criteria. Instead of manually reviewing every stock, you use software to surface opportunities that match your requirements.

Think of it as a search engine for stocks. You define what you're looking for, and the screener returns matches.

Why Screening Matters

With 10,000+ tradeable securities in US markets alone, manual review is impossible. Screening:

• Saves time: Find candidates in seconds vs. hours of manual research

• Removes bias: Systematic criteria vs. emotional picks

• Catches opportunities: Surface setups you would have missed

• Enables consistency: Same criteria applied the same way every time

Types of Screening Criteria

Technical Criteria

• Price action: 52-week high/low, percentage change, price range

• Volume: Average volume, volume spikes, relative volume

• Moving averages: Price vs. 20/50/200 MA, MA crossovers

• Indicators: RSI levels, MACD signals, Bollinger Band positions

• Patterns: Breakouts, pullbacks, gap ups/downs

Fundamental Criteria

• Valuation: P/E ratio, P/B ratio, PEG ratio

• Size: Market cap, revenue, employee count

• Profitability: EPS, margins, ROE, ROA

• Growth: Revenue growth, earnings growth, forward estimates

• Financial health: Debt ratios, current ratio, cash position

Alternative Criteria

• Social sentiment: Trending on Twitter, Reddit mentions, StockTwits buzz

• News: Recent press releases, earnings announcements, analyst upgrades

• Insider activity: Officer buys/sells, institutional ownership changes

• Sector/industry: Filter by business type

Building Effective Screens

Start with Your Strategy

The best screen depends on your trading style:

• Value investor: Low P/E, low debt, stable earnings

• Growth investor: High revenue growth, expanding margins, rising estimates

• Momentum trader: Price breakouts, volume spikes, relative strength

• Swing trader: Pullbacks to support, oversold bounces

The Goldilocks Problem

Too few filters = too many results to review. Too many filters = missing opportunities. Aim for screens that return 10-50 candidates for manual review.

Example Screens

Momentum Breakout Screen

• Price > 20-day moving average

• Volume > 150% of 20-day average volume

• Price at 52-week high (or within 5%)

• Market cap > $500M (for liquidity)

Oversold Bounce Screen

• RSI(14) < 30

• Price > $5

• Average volume > 500,000

• Today's close > yesterday's close (early reversal)

Screening Tools Compared

Different tools suit different needs:

• Finviz: Comprehensive fundamental and technical screening, free tier available

• TradingView: Good screener integrated with best-in-class charting

• Trade Ideas: Advanced AI scanning with high price point

• Banana Farmer: Social sentiment + technical signals, curated leaderboard approach

The Screening Workflow

1. Run your screen(s) at consistent times (pre-market, market open, etc.)

2. Review results on charts—a screen is a starting point, not a trade signal

3. Apply additional analysis: news, technicals, context

4. Add to watchlist or execute trade

5. Track results to refine your screens over time

Common Screening Mistakes

• Over-optimization: Building screens that worked historically but don't work forward

• Ignoring liquidity: Finding great setups in stocks you can't actually trade

• Not verifying results: Treating screen output as trade signals without chart review

• Inconsistency: Running different screens randomly instead of systematic process

Advanced: Curated vs. Filter-Based Screening

Traditional screeners are filter-based: you define criteria, it returns matches. This requires you to know exactly what to look for.

Curated approaches (like Banana Farmer's leaderboard) flip this model. Instead of you defining filters, algorithms score every asset and surface the top opportunities. This is particularly valuable when you're looking for "I'll know it when I see it" opportunities rather than specific criteria matches.

Getting Started

If you're new to screening:

1. Start with a simple screen (2-3 criteria)

2. Run it consistently for 2+ weeks

3. Track which results actually turn into good trades

4. Refine based on real-world results, not backtests

Screening is a skill that improves with practice. The goal is finding your edge, not copying someone else's.