Best Screener Settings For Penny Stocks

by OTC Financial | Last Updated: 12 months ago
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What are the best penny stock screener settings, and how do you screen for good penny stocks?

There are many different variables for finding a good screener for penny stocks.

Some investors think you want to focus on low-priced stocks with large trading volumes.

In contrast, others believe that it is essential for a company to have an upcoming news catalyst announcement with innovation and new growth potential.

Alternatively, other investors may search and screen for penny stock companies trading with a small float size and buy at stock price lows before a price surge upwards to capitalize on profits.

If your trading style is more patient, you may set up screener settings and focus on the more extensive time-frame charts, such as the daily or weekly charts.

If you are an active trader, you most probably are interested in finding the best stock screener parameters on the lower time-frame charts, such as the 1-hour, 30-minute, 15-minute, 5-minute charts accordingly.

One of the most important things you can do as an investor is find a good stock screener to avoid wasting time on companies that won’t meet your needs.

This blog post will first explain all the different criteria available to select options to custom filter your scan search.

Once you understand which indicators can be scanned for, we can then discuss what parameters to set to find high-quality penny stocks with good return potential.

What Is a Penny Stock Screener

  • A penny stock screener is a vital tool to have in your arsenal as an investor. It can do everything from finding stocks that you are interested in, to helping you find trading opportunities and more.

Benefits Of Using A Stock Screener

  • A penny stock screener is an online tool that allows traders and investors to find stocks they are interested in by filtering through companies that meet certain criteria.
  • It can be overwhelming to have so many stocks .sort through manually.
  • Finds out how strong or weak the market is at any given time by showing what percentage of stocks are trading in the green or red.
  • Helps you find trading opportunities.
  • It’s a really good way to filter through stocks and find ones that are worth looking into more closely.

What to Look For in OTC Penny Stocks

What should I look for when screening for penny stocks? We will break down all the criteria and indicators that you can filter into their main categories.

Once you understand what criteria you can filter by in your custom searches, only then will you be able to decide the best penny stock parameters to use with your penny stock scans.

The screener settings covered are typically the most commonly known and used amongst investors. You may find additional technical indicators not listed here.

15 Best Stock Screener Parameters Breakdown

The parameters we discuss below are standard settings and go hand in hand for finding high-quality penny stocks.

You may want to focus on certain types of indicators that interest you more than others, so we will go over all the different categories available below before looking at how they are related and best used in combination with each other.

1. Price Action Breakouts

  • Price Action Breakouts are indicators that scan for price chart patterns. These patterns are formed if the stock has been trading sideways in a range and suddenly breaks out of the consolidation to form a new trend.

2. Moving Averages (EMA, SMA, VWAP)

A moving average is a mathematical calculation used by traders and investors to determine if a trend is changing.

The most common type of moving averages to use for stock screener parameters are:

  • Exponential Moving Averages (EMAs). These types of moving averages are more sensitive since they react faster to price changes
  • Simple moving average (SMA). This is calculated by taking the sum of all closing prices over a set number of periods and dividing this by the total number of periods
  • Volume-Weighted Average Price (VWAP). This is the average price of a stock over a trading day, taking volume into account

The main thing about moving averages is that they are lagging indicators.

The price action must be already in motion before it can be detected by traders using these types of trend-following tools.

When using a moving average screener setting in your penny stock scans, keep this in mind.

3. Relative Strength Index Indicator (RSI)

RSI is a momentum indicator used to find oversold stocks and possible price reversals.

RSI or Relative strength index works by comparing the performance between periods.

If the price of a stock increases, then the RSI increases, but if the price decreases, then the RSI decreases.

The RSI oscillates between 0 and 100. If the RSI is below 30, it is oversold, which means that a price reversal may occur soon as traders begin taking profits on their positions; if the RSI line passes above 70, it could indicate an overbought condition whereby the price could quickly reverse.

4. Money Flow Index Indicator (MFI)

The Money Flow Index (MFI) is a financial momentum indicator that measures money flow into and out of stock over a specified period.

It is an indicator that incorporates volume into the Relative Strength Factor, whereas the RSI does not. One way to do this is through calculations using Money Flow Index values to find stocks at their highest “sell” value.

One calculation involves multiplying two Money Flow Indexes: positive (Money Flow) and negative (Money Flow).

The resulting figure, the Money Ratio, is normalized into the abbreviation we refer to as an MFI.

5. Moving Average Convergence Divergence Indicator (MACD)

  • MACD is a momentum oscillator that measures the difference in prices between two moving averages (one short and one long-term) of stocks. It was created by Gerald Appel and it stands for Moving Average Convergence Divergence. MACD can be used as both, an indicator (to identify trends), or as a trend-trading strategy
  • As a trading strategy, MACD is used to identify trend changes by applying the following rules. A stock is considered to be in an uptrend if the short moving average crosses above the long-term average (MACD line increases). The opposite applies to downtrends

6. Company Stock Float

What is a “float” in regards to a company’s stock?

  • The Float Size is the number of shares available for trading in a security
  • This is also called the “Outstanding Shares”. The amount of float available or not available impacts tremendously on how much can be bought or sold, which affects the price and what an investor will pay to buy them
  • High Float Stocks require lots of buying volume to increase the share price as the total outstanding shares in the company are much larger and takes more effort
  • Low Float Stocks require less buying volume to increase in share price as the total outstanding shares in the company are smaller and require less effort

How to find the float of a stock? Finding the company stock float for an OTC penny stock can be found under the “Security Details” and “Share Structure” tab on the OTC Markets website here.

You will see the Share Structure broken down by Market Cap, Authorized Shares, Outstanding Shares (Restricted and Unrestricted), Held at DTC, and finally Float.

7. Price

  • The price at which a stock is bought or sold. This is determined by the supply and demand for that stock
  • Share price range is the custom settings you may use as a filter to limit searches to only penny stocks within a certain price range you specify

8. Trading Volume (Increase/Decrease)

  • A high volume is indicative of more investor interest and the outcome is generally higher prices if there are more buyers than sellers
  • A stock with low volume will likely have a lower share price as there are fewer buyers or sellers to determine supply and demand
  • Depending on the buying vs selling investor demand this will influence the stock price to go in any direction

9. Relative Volume Indicator

  • Relative Volume is the amount of volume for a stock relative to that day’s average volume.  This is not the absolute amount of trading taking place for a stock, but how much higher volume or lower volume than usual
  • Increased relative volume searches are good to spot trending stocks with 2x, 3x, or more of their traded volume compared to the previous trading days

10. GAPs

  • A stock has to close above or below its previous closing price to be considered a gap trade. Gaps occur in both directions; therefore, there are also “down” gaps and “up” gaps. If a stock gap is up from its previous daily close to open higher than usual this is called an upwards daily gap
  • If you are looking for stock gaps that occurred between yesterday’s close and today’s opening price you can create a filtered scan for this setting

11. Percentage Increases And Decrease Changes (%)

  • A stock will generally increase in value whenever it increases over the prior day, and decrease when it falls. Using this basic concept it is possible to create a scan that looks for stocks with both high percentage changes in price as well as large absolute dollar value gains

12. Market Cap

  • Market capitalization (market cap) is one way of measuring the size of a publicly-traded company

13. Chart Patterns

  • Top Patterns
  • Bottom Patterns
  • Continuation Patterns
  • Breakouts
  • Breakdowns
  • Gap Ups
  • Gap Downs
  • Support and Resistance
  • and more

Chart patterns are price formations created from observing the relationship between stock prices and stock security over time.

Chart Pattern analysis is typically used in conjunction with other forms of technical analysis to help predict future price movements.

There are dozens of these, but some well-known examples include channels, triangles, wedges, triple tops and bottoms, descending triangles, and so on (to name a few).

Some chart patterns repeat in the same stock (or other security) many times, while others do not.

Some of these patterns are reliable for projecting future prices, while others offer no useful predictive information. However, it is essential to note that future chart patterns are not dependant on historical performance.

14. Short Interest (%)

  • Short Interest is the number of a stock’s publicly tradable shares that have been sold short (i.e., are being bet against). This figure is usually expressed as a percentage and it can be found in online at sites such as OTC Short Report free stocks screener
  • High Short Interest can signal pressure and a decline in stock price

15. Know Sure Thing Indicator (KST)

  • Know Sure Thing (KST) is a momentum oscillator intended to make rate-of-change price data easier for traders to interpret
  • Trading signals can be generated by the KST oscillating above or below a line (the signal line), and traders also look for when prices are too high to sell or too low to buy
  • Traders use KST in combination with other technical analyses to maximize their odds of a successful trade

Creating Penny Stock Scanners In Scanz Software

There are three ways you can use Scanz’s scanning capabilities to find penny stock trading opportunities: the Easy Scanner, the Pro Scanner, and the News Scanner.

  • The Easy Scanner is great if you’re looking for a quick way to find cheap stocks that have been performing well recently.
  • The Pro Scanners allow users to use more detailed filters.
  • The News scanner allows investors to find companies in news headlines that might be good investments.

Creating Penny Stock Scanners In Trade-Ideas Software

The Trade-Ideas software is a powerful ai tool that allows you to leverage the power of algorithms, data, and dozens of other tools to create penny stock scanners.

Check out a tutorial on downloading and setting up Trade-Ideas settings to create screener settings for penny stocks.

OTC Stock Screener

The OTC Stock Screener is used by investors wishing to take advantage of over-the-counter (OTC) investments, including companies that trade on the “pink sheets” and other over-the-counter markets.

The OTC Stock Screener is free and straightforward to use.

It has the following features: Investors can filter by various criteria like market cap, daily volume, trading liquidity, and more. 

Final Thoughts

Just because you’ve found the best screener settings for penny stocks, it doesn’t mean that the companies it displays will not fail.

Many examples of great-performing stocks with large volume and massive percentage change crash for various reasons.

You shouldn’t invest in something simply because it has been moving up in price and volume.

It would be best to carry out a fundamental analysis of the company behind that ticker symbol.

It’s easy to fall in love with a company stock price history, but don’t forget to look at its technical analysis and fundamentals every time you enter or exit your position.

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