Let‘s first talk a bit about what stock screening is: stock screeners take a big list of stocks and reduce this list to a smaller list of stocks which are then candidates for your portfolio. Our manual describes how stockworm stock screeners provide you with unparalleled screening capabilities. This flash movie will also provide you with a great introduction to our screeners.

Traditional screeners focus on filtering your list of stocks using preset data ranges (e.g. only keep p/e < 20). Stockworm offers extensive filtering capabilities but also allows the ability to sort based upon human legible terms like ‘low price-to-earnings ratio‘.

Stockworm screeners are rule based, so you build your screening results by creating a list of rules. Here‘s an example rule set:

• rule 1: start with all stocks in the stockworm database
• rule 2: limit the list to small cap and greater stocks
• rule 3:limit the list to stocks which have a six month price momentum of one or greater
• rule 4: sort the remaining stocks based upon a combination of: earning growth this year (high to low) and 6 month momentum (high to low)
• rule 5: keep the 32 highest ranked stocks based upon the above sorting criteria

If you are logged into the stockworm site, a great place to get started with screeners is to view the list of stockworm screeners. Let's discuss an interesting screener as an example. The foolish 4 screener looks complicated but it simply follows the rules set out on fool.com. In plain text, we are seeking:

• stocks from the dow jones industrial average (dow 30)
• pick the highest 10 dividend yields (we sort by div yield high to low, then only keep the top 10)
• pick the lowest closing price (we sort by price low to high and then keep the top 5)
• filter out the lowest priced stock if it is also the highest div yield in the list
• keep the 4 lowest price remaining stocks — this is the foolish 4!

Now, the foolish 4 screener represents a set of rules which have been refined through extensive backtesting of stock data (thus the exotic rule set). You may find that, for example, the undervalued screener better represents your investment criteria. Regardless, when you are getting started with screeners, it is a good idea to find which of the stockworm screeners best match your investing style, then use the 'save as' link to save the screener as your own. At this point, you can begin to modify the screener by adding or deleting rules. Of course, if you are feeling brave, you can always start with a new screener.

Once you have a screener set up to match your needs, your next question is likely “is this any good”? To answer this question, you‘ll need to do a bit of backtesting, which is the subject of our next forum post.