To trade low-cost shares successfully, you’re going to need a strategy. The same is true of any investment plan, whether you’re spending cash on something like blue-chip securities, or OTC trades. However, when it comes to penny stocks, there’s often a lot more risk to consider, making a viable swing trading strategy all the more important. Scanners are just one of the tools that people can use to help then figure out which penny stocks to watch when they’re just getting started. Today, we’re going to give you an introduction to stock screeners, how they work, and what you can do to improve your chances of making a profit in the long-term.

What are Stock Screeners?

When you’re first getting started in the stocks and trading industry, it’s important to spend some time figuring out how you’re going to spend your cash. Usually, you’ll start with the industries that you feel most knowledgeable in. It’s common for people with a background in engineering to start in the manufacturing space, for instance.

You might also be tempted to let the guidance of other big names in the trading industry guide you. While there are some mentors out there that can definitely be trusted to deliver useful advice, this isn’t always the case for every thought leader. It’s important to do your research and make sure that your chosen mentor can be trusted. Even if you find an expert that you believe you can trust, don’t take their word as gospel. Make sure that you research every bit of advice they can give you thoroughly. Stock screeners can assist with these. These software options allow you to scan through large lists of available securities in a small amount of time. You can apply filters to your screening strategy, making it easier to find the options that are best for you.

Finding Options to Match Your Parameters

The parameters that you use with your stock screener will be unique according to your needs. Popular filters include price, performance, chart patterns, and volatility. All of these components can help you find the stocks with the best potential for a massive return. The more you focus on developing your strategy, the easier it will be to screen your options. However, it may be worth to start by looking at:

• Breaking news: Looking at stocks that are gaining attention because a break in news could be a great way to access new opportunities. Just make sure that the companies that you’re spending money on are in the news for the right reason – like an increase in publicity or a lot of popularity.
• Float: Make sure that you check the number of shares that are available to trade in your stock. This should be calculated by subtracting the number of closely-held securities from insiders and the ownership plan for the business. Fewer shares mean that you’ll have a harder time making a profit.
• Relative volume: Relative volume is a parameter that tells you how the current trade volume compares to previous trading volumes in a specific period of time. This gives you an idea of how active your security is.