Technical Stock Screener

However, if you’re a trader looking for short-term opportunities, technical analysis is what you must focus on. Technical analysis involves analysing the historical price and trading volume of an asset to predict its future movements. Through technical analysis, you can unearth patterns, trends and potential reversal points that are not very apparent.

However, a major limitation of this method is that it consumes a lot of time since you need to look at and analyse multiple indicators. Here’s where tools like technical screeners can come in handy. They’re specially designed tools that allow you to instantly filter stocks based on predetermined technical criteria. It speeds up the technical analysis process significantly and helps you make informed trading decisions that are in line with your goals and risk profile.

A technical stock screener is a tool that allows you to shortlist stocks that meet the predefined technical criteria you choose. The primary goal of the screener is to help you identify potential trading and investment opportunities based on your preferred technical indicators and patterns.

Research 360 by Motilal Oswal offers a powerful technical stock screener in India. With the tool, you can filter stocks on the basis of more than 100 technical criteria across 10 different categories of indicators. From moving averages and relative strength index to MACD and Bollinger Bands, you can instantly get information on stocks that match your chosen technical indicator.

The way technical indicator screeners work is very simple. Here’s a quick step-by-step overview to help you understand them better.

Firstly, you need to select the technical criteria based on which you want the tool to filter stocks. For example, if you wish to know what stocks are in the overbought zone or oversold zone of the relative strength index (RSI), you can simply select the criteria pertaining to it. You can also choose multiple technical criteria across different segments as well.

The technical indicator screener will filter stocks based on your inputs. The more criteria you choose, the shorter and more refined the list of stocks is likely to be.

Once the stocks are displayed, you can sort through them and filter them further based on the index or sector.

Technical indicators can be categorised into different types such as trend-following indicators, momentum oscillators, volume indicators and volatility indicators, among others. Let's look at some of the most commonly used technical indicators.

Moving Averages

Moving averages are lagging technical indicators, meaning that they provide insights after the price movement happens. They help you identify trends over a specific time frame by smoothing out an asset’s price data. There are two different types of moving averages - Simple Moving Average (SMA) and Exponential Moving Average (EMA).

Simple Moving Average (SMA) calculates the average price of an asset over a set number of periods. Exponential Moving Average (EMA) also does the same but assigns more weightage to prices of recent periods. This makes the EMA more responsive compared to the SMA. An increasing moving average may indicate a bullish trend, whereas a decreasing moving average may indicate a bearish trend.

Moving Average Convergence and Divergence (MACD)

The Moving Average Convergence and Divergence is a trend-following technical indicator that helps establish a relationship between two moving averages of an asset. The indicator consists of two parts - an MACD line and the signal line.

The MACD line is the difference between a short-term EMA and a long-term EMA. The signal line, meanwhile, is a 9-day EMA of the MACD line. If the MACD line crosses above the signal line, it signals a potential bullish trend. On the other hand, if the MACD line crosses below the signal line, it indicates a potential bearish trend.

Bollinger Bands

Bollinger Bands are a volatility indicator that consists of three parts - a middle band and two outer bands. The middle band is a Simple Moving Average (SMA) for a certain specific time frame, say 20-day SMA. The two outer bands, meanwhile, are standard deviations of the middle band’s SMA.

The Bollinger Bands react to market volatility and automatically adjust themselves. For instance, the bands expand during periods of volatility and contract during low volatility. Apart from gaining insights into market volatility, you can also identify overbought and oversold conditions. For example, if an asset’s price touches or crosses the upper Bollinger Band, it is said to be overbought. On the other hand, if the price touches or crosses the lower band, the asset is said to be oversold.

Relative Strength Index (RSI)

The Relative Strength Index or RSI is a momentum oscillator that can measure the speed and quantum of price movements in an asset. The technical indicator moves between a scale of 0 to 100. If the RSI of an asset is above 70, it is said to be overbought, increasing the chances of a trend reversal or market correction. Conversely, if the RSI is below 30, the asset is said to be oversold, which may also trigger a reversal or correction.

Stochastic Oscillator

Another momentum indicator, the Stochastic Oscillator measures the location of an asset’s closing price relative to its price range over a specific period. This technical indicator also moves between a scale of 0 to 100. If the oscillator moves above 80, the asset is said to be overbought and if it moves below 20, the asset is said to be oversold. The Stochastic Oscillator can be very useful to determine potential entry and exit points.

Average Directional Movement

The Average Directional Movement Index or ADX is a technical indicator that’s used to measure the strength of a trend irrespective of its direction. The ADX is represented as a line on a chart that ranges from 0 to 100. If the ADX is rising, it may indicate a strengthening trend, whereas a falling ADX indicates a weakening trend or a trend that’s moving sideways. The Average Directional Movement Index on its own may not provide the insights necessary to make trading decisions. Therefore, it is advisable to use it in conjunction with other indicators.

Williams %R

The Williams Percent Range or Williams %R is a technical indicator that identifies overbought or oversold conditions. It moves on a scale of -100 to 0, with readings below -80 being considered as oversold and readings above -20 being considered as overbought. With the Williams %R, you can identify potential reversal points.

Money Flow Index

The Money Flow Index or MFI is a technical indicator that measures the strength and direction of the flow of money in an asset for a specified time frame. The momentum oscillator moves on a scale of 0 to 100 and uses both price and volume data to identify overbought and oversold conditions. High MFIs are considered to be overbought regions, whereas low MFIs are considered to be oversold regions.

Research 360 by Motilal Oswal offers a comprehensive technical stock screener in India. Here’s a quick look at some of the examples of the screeners that you can find on the platform.

Each category of technical indicators mentioned above features more in-depth screeners to help you filter stocks more effectively. For example, under the Relative Strength Index category, you can find screeners like RSI Overbought Zone and RSI Oversold Zone, among others. Meanwhile, under MACD, you can find screeners like MACD CrossOver Signal Line and MACD Moving Above Zero.

Each category of technical indicators mentioned above features more in-depth screeners to help you filter stocks more effectively. For example, under the Relative Strength Index category, you can find screeners like RSI Overbought Zone and RSI Oversold Zone, among others. Meanwhile, under MACD, you can find screeners like MACD CrossOver Signal Line and MACD Moving Above Zero.

You can select the screener depending on your preferred indicator. For example, if you wish to identify oversold stocks, you can choose screeners like RSI Oversold Zone and Price CrossOver Lower Bollinger Band. This should give you the list of stocks that have been oversold and are likely to bounce back up in the future.