Picking the best stock is all about picking the stock whose price will rise (when you are long), or fall (when you are short), during the time period that you plan on holding the stock. The age old axiom of "buy low sell high" is what every investor strives to do. Two things must be decided before using the Ciation Investment Solutions stock screener most effectively.
1). Determine the type of investor you are. 2). Determine how much risk (volatility) you can tolerate.
What Type Of Investor Are You?
This question has to do with the time frame over which you plan to hold a position in a trade. Whether long (you will buy a stock first with the intent to sell after its price rises) or short (you will sell a stock first, borrowing the shares, with the intent to buy/cover replacement shares after the stock's price falls) determining the time frame for your stock position is crucial. The shorter the time period you hold a position the less risk there is. The longer the time frame for holding a position the greater the risk. All of this of course depends on the volatility (and the quality) of the stock that's held.
Investors holding stock positions for less than a day are "day" traders. Day traders make multiple trades in the same day taking small profits each time. If you are a day trader then you want a relatively volatile stock. One whose price fluctuates greatly during the day. You don't care if it goes up or down as long as you can make a reasonable determination of what it's likely to do next. Constant attention must be paid to incremental fluctuations in stock prices that are made moment by moment during the day. If you are a day trader there are Ciation Investment Solutions metrics to determine the stocks with the greatest percentage of price movement, and the most likely direction those movements will initially take. The metrics that will interest you are:
Investors holding stock positions for longer than a day but usually for only a few days are "swing" traders. These traders make multiple trades a week usually looking for stocks whose prices swing in a fairly predictable pattern over the course of a few days. When the price has swung (dipped) in a downward direction past where it normally does then it is a buying opportunity (time to enter a long position, or close a short position). Alternately when the price swings in an upward direction past where it normally would then it is a selling opportunity (time to close a long position, or create a short position). The metrics that will interest you are:
This question has to do with your tolerance for loss which naturally comes with volatility. With a high tolerance for volatility the phrase "lose big, but win bigger" can apply to you. A stock whose price moves dramatically up and down can mean big paper gains and losses during the time that a position in the stock is held. If you are prone to panic when looking at a large drop in your portfolio balance then your toleration of risk is low. But if you are confident that a stock you have chosen is a strong stock, and you entered your trade at the right entry point (when all indications showed the price was due to move in a direction favorable to your trade), and you are willing to ride out a temporary "dip" in anticipation of a recovery then you have a higher tolerance for risk. Strong stocks lead the market in a recovery unless catastrophic news about a company caused its price to dip. Through use of good management techniques (i.e. stops, stop loss triggers, etc) investors can protect their principal before catastrophic damage is done.
The metrics that will identify stocks with high and low volatility are: