Hello fellow investors on Stockopedia..
I have created the following screen to pick quality stocks with a price momentum:
https://www.stockopedia.com/sc...
What is your opinion about this screen. Any criticism or any feedback is welcome since I am a newbie.
Thank You.
I suggest you drop the Stockrank down to 90, >99 is excluding too many good stocks. Also I would have the volume 10days/3 months as a positive.
The volumes rules you've set have practically no useful effect.
Avg volume>1 means include all stocks that have more than 1 share traded. This basically includes all stocks as which stocks do you know that have zero shares traded? Maybe when the market opens for very illiquid stocks, or stocks in suspension?
10d/3m compares the 10 day volume vs the 3 month volume. This should be set to positive. You want to know by how much the 10day volume is above the 3 month, so it could be 10 for 10 percent higher, etc.. This lets you know when there is a surge in volume. Volume surges can indicate institutional buying which is what you want to know early on so you can get a free ride on the resultant rallies.
If you deleted these two metrics you would find that your list has not changed much if at all.
To learn more, check out Ben Hobson's superb articles on screens and strategies, they've taught me a lot on this subject which would have been difficult to figure out otherwise.
thanks for your reply ...
what do you believe is the most appropriate indicator of momentum i.e a stock that is trending.
Moving averages are used for trends. As before, check out Ben's articles. This one is for moving averages.
If you want to screen For quality and momentum why not use the quality and momentum ranks instead of Stockrank?
It really depends on what you are trying to achieve with the screen. What are your goals?
It looks like you are trying to find high ranking shares which have seen a recent price & volume surge.
One thing I'd be wary of in the UK market is over-indexing on positive 1 week relative strength. Most of the academic literature shows that 0 to 3 month short term relative strength has a tendency to reverse, whereas 6m to 1 year relative strength shows persistence. The UK market has a lot of small and microcap shares that are highly volatile - so short term RS gives a lot of false signals.
The rule "10d / 3m Volume > -100%" is basically meaningless as it's essentially including the entire market. If you want to find a recent volume surge above the 3m average, then set this field to be above zero (or well above). This can indicate significant recent buying in the market from larger players.
Again 10 day average volume > 1 - this is essentially meaningless for the same reason - it includes almost the entire market. If you want to use this field you can play around with it on its own and watch how the universe of shares is reduced. Almost half the shares in the market have a 10d average volume of greater than 200,000 shares. If you wish to screen out for illiquid shares then this can be used, but ultimately it does depend on the price of the shares. I personally find using the market cap and the "Spread" to be quite useful liquidity filters. In my screens I tend to use Mkt Cap > £10m and Spread < 500 (5%)
Thank you for such a detailed reply sir.
So what you are saying is that 1 year relative strength turning postive is a better indicator of momentum in comparison to 1 week relative strength turning positive.
Right ?
