Undoubtedly, modern technology is a boon to mankind. Earlier, analysing and scanning a stock would take at least 4 to 5 hours of a trader. But, now with just a few simple clicks, at your fingertips, you are getting oven-ready and precise results in a few minutes. With stock scanners, you can find your best fit stocks in a couple of minutes. In this article, we will be talking about different types of stock scanners and how combination scan will change your stock trading journey.
When you use stock scanners, you are able to choose specific stocks which you want to see. You can use complex stock scanners and look for chart patterns. Moreover, you can even use simple stock scanners and look for wide matches like stocks that had earnings in the last 24 hours.
Therefore, by using technical, fundamental, futures scans, and others you will save your precious time as well as invest in the right stock and earn proficiently.
What is a stock scanner?
A stock scanner is defined as a screening tool that explores the market to detect stocks that meet user-selected metrics and criteria for investing and trading. Scanners can be efficiently used to detect and find stocks that meet your set of specific filters.
A stock scanner is utility software for investors and traders. It goes through thousands of stocks in a few minutes and presents results that fit your criteria. It is both parsimonious to time and money. And, with time being equivalent to money in recent times, a stock scanner is all you need to make good money. Any orthodox trader will tell you how a stock scanner changed his life.
A stock scanner houses multiple types of stock scans like fundamental, technical, intra-day, options scans, price scans, and makes stock trading as seamless as possible.
How to use stock scanners?
The chief aim of using any software is to attain maximum utility out of it. So, when you are using a stock scanner, your aim must be to get the best stocks listed out for you. You simply have to set your criteria and requirements and the scanner, from a list of thousands of stocks, will present you with the stocks which are best fitted for you.
- Build a Watchlist
You must opt for a stock scanner that searches the general market and look for new stocks and introduce them to you. In this way, you can add these new stocks to your watchlist. Note that these new stocks must be acclimatised to the speed and pace of liquidity, price action, volume, and spread. Now, if you pre set the criteria and filters for stocks with respect to volume requirements and price, you narrow down your horizon. It is always recommended that you look for new stocks that have the potential to bring you better returns. Once you have analysed the new stocks, you can add them to your watch list and trade on them.
- Intraday Alerts
The firmness of the filters you use will be the cue for generating accurate results. You need to make sure that you have set the parameters right. Suppose, if you are scanning pattern setups, you have to validate the results’ accuracy. Now, hammer candlestick scans will be generating results with a candle that seems to be a hammer itself. But, this hammer will be lacking the subsequent red candles that make it a turnaround hammer candle. So, if your scan is already set, you need to be aware of this flaw. If your scan is customizable, then you must learn the programming to produce the adequate results. It is notable that scans are not intuitive. Therefore, the scanners miss the factors that influence the pattern’s effectiveness during scans.
What are the criteria for quality scan results?
You must be knowledgeable and aware of the results you are expecting even before setting up your filters for scanning stocks. What inputs you are putting in will either make or break your scans. Also, remember that tweaking is necessary for generating the most precise results. Moreover, the results’ accuracy will depend on your filter setting. Nonetheless, accurate results from stock scanners save help that it is otherwise involved in manually analysing scans.
- Trigger and Parameter Settings
The basic settings that every stock scanner must have are price range, minimal average trading volume, exchanges like NSE and BSE, and minimum float. This is to prohibit scans from illiquid, thin, penny, and stagnant stocks. If you are looking for a pattern-based criterion, then make sure to look for the trigger, promoting the trade. So, this allows the filter to first confirm a trigger and then allows a trader to decide or confirm whether to place a trade or not. These filters make sure that the traders get ample time to take an edge of the trading opportunity by providing accurate results in minimal time.
- Customize your scans
It is crucial to customize your scans as per your niche. These also make your results accurate and favourable. While setting up the filters, you must focus on your niche and customize as per trading stocks and set-ups. By being familiar with the stock before placing a trade, you will spend less time acclimating to it. Essentially, the result is a reduction in slippage, and you can start the screening process faster once a candidate triggers on the scanner.
Customizing your scans becomes easier with combination scan. With the help of combination scan you can customize and even look upon different scans at one place. We have talked about this particular scan in the latter segment of this article.
- Quality over Quantity
You are assigning the stock scanner to do the tedious work of analysing and scanning stocks that you might have been doing manually. So, the stock scans must be discriminating and selective in generating results for you. The quality of the stock results is judged by validity, timeless, and accuracy of the results in meeting the set criterion.
Using a stock scanner means assigning HR to look for potential candidates for the job role. As senior personnel, your task is to simply “interview” and analyse the stocks for a potential trade. So, the firmer the process of selection and qualification, the easier to put it to task or trade.
- Price movements
Scan stocks with potential price movements. For optimal efficiency, it is prudent to ensure your intra-day scanned stocks have a criterion that only outputs stocks with significant price movements. So, to earn profit from volatility, there must be also volatility.
What are the different types of scans?
Before setting up filters for scanning stocks, you must know the various types of scans available to you. There are different types of scans and each scan has its own characteristic feature. As per your criteria and trading style, you have to choose the apt scan. So, if you are a swing trader and make long-term investments, then fundamental scans will be ideal for you. On the other hand, if you are a short-term investor and intra-day swing trading, technical scans will be perfect for you.
- Fundamental Scans
These scans are tailor-made for fundamental and long-term investors and traders. The fundamental scans are useful for finding out stocks that are overvalued or undervalued. Fundamental scanners are also great at comparing stocks as opposed to their sectors, peers, industry, and benchmark indexes.
- Technical Scans
Technical scans look for distinct price patterns like IE: breakdowns, breakouts, triangles, double resistance/support, etc. They also include specific candlestick formation triggers such as doji, hammer, shooting stars; price alerts like percentage of price change, IE: new highs and lows; and indicator triggers. For the best efficiency and optimal results, these scans need to be tailored more on the program level or require additional evaluation effort after candidates have been identified.
- Intraday or Real-time
As the name suggests, intraday scans work to search stocks during market hours or in real-time. These are sensitive results and require you to analyse the results quickly and plan if a trade is to be taken. Intraday patterns are susceptible to fading out and developing rapidly. So, if you are a day trader then you will be most beneficial with this scan.
- Post-market or End-of-day Scan
These scans provide fundamental or pattern-based results. Traders should be calm and in no hurry while using EOD scan. These scans are specifically used to assist traders in conducting the following day’s trading session. Moreover, the results are formed on the basis of closing prices. Hence, there is no hurry or need to trade the stocks immediately.
What is Combination Scan?
Combination Scan is a unique feature of StockEdge where you get to fuse and merge different types of scans like technical, fundamental, price, future, options, volume and delivery, and candlestick scans. A combination scan helps you to filter stocks on various criteria and significantly enhances the efficacy of the scan feature.
StockEdge is one of the top Indian Stock market apps. With StockEdge app on your mobile phones, you sign-up for profitable stock market trading. The StockEdge app comes with two subscriptions, namely StockEdge Club and StockEdge Premium. The scans are something to boast about and the features are impressive. With StockEdge you get impressively detailed visualization on different stocks, EOD analytics, timely alerts. Not just that, interactive charting tools and you can lucidly plot candlesticks, OHLC, fundamental parameters, and more. Moreover, you can enhance your knowledge of investing styles and learn new tricks as well.
You can get access to StockEdge’s Combination Scan by getting their premium subscription. You can create your own combination and get a list of stocks that qualify the criteria set by you. Moreover, traders and investors can also get access to readymade combination scans which have swing and intraday strategies. The results are curated by StockEdge’s research team to aid investors and traders to assist in scanning and analysing stocks through a simple click.
Final Thoughts
With a combination scan you make sure that you are choosing to trade from a pool of qualified and top-notch stocks of your choice. Stock scans are an incredible tool to help traders scan and choose stocks in a couple of minutes with just a few simple clicks.
