Moving Average Stock Screener

What Is An Moving Average Screener?

The Indian share market contains thousands of listed companies whose stocks rise and fall in price regularly. However, investors witness a pattern in the share market where the prices of a majority of stocks follow a specific pattern to either rise or fall in price. The pattern, called the trend, is an important factor for investors who want to make profits in the short term to understand where the stock prices might go in the near future. 

One of the best ways to understand the current market trend is through a technical analysis, which includes the moving averages that highly affect price volatility. However, analysing moving averages for individual stocks is a complex and time-consuming task. Hence, investors use moving average screeners to screen stocks that fulfil certain moving average criteria to identify trends and potential trading opportunities.

A moving average screener is a technical tool that filters stocks based on their moving averages. The screener contains numerous filters related to moving averages which the investors can use to set moving average criteria to identify stocks that match the set criteria. Investors can further analyse the stocks and make informed investment decisions based on the results. 

Understanding A Moving Average Screener

The stock market follows a specific trend, where the prices of a majority of the stocks listed on the stock exchanges move according to the current trend that defines investor sentiment. There are two types of trends in the stock market, bullish and bearish. In a bullish trend, the stocks increase in price, while in a bearish trend, the stocks decrease in price. Investors who invest in the stock market want to understand the current market trend to identify stocks with ideal entry or exit points. 

One of the best ways to understand the market trend is through a detailed technical analysis, including the moving averages. However, filtering stocks based on moving averages is difficult when thousands of listed stocks exist. 

A moving average screener, also called a moving average crossover screener, is a stock screener that filters all stocks listed on the stock exchanges based on certain moving average criteria fed by the user. The screener scans a list of assets and applies filters based on the moving averages. The screener selects a set of stocks, calculates the moving averages, and presents a list of stocks, fulfilling the selected moving average criteria, to allow investors to make informed investment decisions. 

Types of Moving Averages

Analysing trends in the stock market is one of the most important factors for investors basing their investments or value adjustments on a company’s technical analysis. Most of the investors who execute technical analysis give added attention to moving averages as they provide valuable information about the current market trend. 

Investors use a moving average screener to screen companies and determine how the current trend may affect the future stock price. However, as numerous factors may affect the current and future trends of listed companies, investors use various moving averages to understand the trends. Here are some of the most utilised moving averages: 

●    Simple Moving Average: Simple Moving Average (SMA) is one of the most basic types of moving averages included in a screener moving average. It is a technical analysis tool showcasing price fluctuations over a specified period. The simple moving average is calculated by adding up the closing prices of a security or asset for a specified number of periods and dividing by the number of periods. You can use the moving average formula for any number of days to determine the current market trend. 

●    Exponential Moving Average (EMA): Exponential Moving Average (EMA) is a technical analysis tool similar in its calculation process to the SMA. It focuses more on the closing price of the security or asset to provide information about the price fluctuations over a specific period. EMA’s added weight on the recent data points allows it to respond more quickly to changes in the price trend compared to the Simple Moving Average. Its formula is: EMA = Closing price x multiplier + EMA (previous day) x (1-multiplier). 

●    Weighted Moving Average (WMA): Weighted Moving Average (WMA) is closely related to the Exponential Moving Average (WMA) but places more weight on assigning different weights to each data point within the moving average. Like the EMA, WMA assigns more weight to the most recent data points and less to the older data points. The calculation of WMA involves multiplying each closing price in the data set by a weight factor and summing up the resulting values. A stock price higher than the WMA indicates a bullish signal, while a stock price lower than the WMA indicates a bearish trend. 

●    Triangular Moving Average (TMA): Triangular Moving Average (TMA) is a technical analysis tool that is calculated by taking an average of prices over a certain period while assigning more weight to the central prices and less weight to the prices at the ends of the period. Investors use TMA through the moving average crossover scanner as it is more responsive to the trend in a stock’s price change than other types of moving averages. Traders and analysts often use TMA to identify trends and support and resistance levels in the price data. When the current price is above the TMA, it is often considered a bullish signal, indicating an upward trend.

●    Adaptive Moving Average (AMA): Adaptive moving average is a type of moving average that investors can analyse through an ideal moving average stock screener. The AMA is an ideal technical analysis tool that adjusts its sensitivity to changes in price volatility. Unlike other moving averages, which use a fixed number of periods to calculate the average, the AMA uses a variable number of periods, depending on the volatility of the price data. The calculation of AMA involves taking the average of prices over a certain number of periods and then adjusting the number of periods used in the calculation based on the current level of volatility in the price data. When the current price of a stock is higher than the AMA, it indicates a bullish signal, while a lower than AMA stock price indicates a bearish signal. 

What Does A Moving Average Screener Indicate?

A moving average screener is a vital tool investors use to filter through thousands of companies based on their moving averages. It allows investors to identify stocks that fulfil a certain moving average criteria included in the investment strategy. Investors can use a moving average screener to find stocks that have recently crossed above or below a moving average or to identify assets that are trading above or below a certain moving average for a specified period. A moving average crossover scanner can indicate a variety of things depending on the specific criteria, such as: 

●    Stocks that have their current price above the 50-day moving average indicate that the stock is experiencing a bullish trend and have the potential to reach a higher stock price. Such a trend indicates that investors can enter at the current price to make profits in the short term. 

●    Stocks that have their current price above the 200-day moving average indicate that the stock may be at the edge of its bullish run, and investors may start selling the shares in the future. Such a trend can indicate a direction where the share price may fall owing to the sudden selling spree by the investors. 

What Are Some Examples of Moving Average Screeners?

Traders and investors can use moving averages screeners to analyse stock price trends and identify potential trading opportunities. The type of moving average screener used by investors depends on the investor’s investment strategy and the included criteria for moving averages. Here are some examples of moving average stock screener investors can use to find information about their selected moving average: 

●    Simple Moving Average Screener: Simple Moving Average Screener is a stock screener that presents information about various stocks’ average prices over a specific period. The period ranges between 20-200 days. 

●    Exponential Moving Average Screener: EMA screener puts greater weight on recent price data to provide details about the price change. The results presented by the EMA screener are more responsive to security price changes than the SMA screener. Investors who want to identify short-term trends use the EMA screener. 

●    Weighted Moving Average Screener: Weighting Moving Average screener is a technical analysis screener that is similar to the EMA screener but places a higher weight on the price data. The WMA screener is more responsive to changes in a security's price than the EMA or SMA, and traders and investors who want to identify short-term trends or momentum commonly use the screener. 

Conclusion
Understanding and analysing moving averages is vital when executing technical analysis on stocks and finding ideal stocks to invest in that match the investment strategy. However, finding stocks that fulfil the set moving average criteria is difficult as it requires taking stocks individually and determining if their moving average matches the criteria included in the investment strategy. The process is highly time-consuming and may lead to manual errors, forcing investors to make the wrong investment decisions. 

A moving average screener is an ideal tool that assists investors in filtering thousands of stocks based on their moving averages to produce a list of stocks that have the same moving averages as the criteria set by the user. Investors can customise moving average stock screeners to meet specific criteria based on the trader's or investor's preferences. For example, some traders may use moving average crossovers to identify entry and exit points in a trade, while others may use moving average trends to identify long-term investment opportunities. However, investors must use the screeners along with other technical indicators and tools to make informed investment decisions.