How many criteria should a stock screen use?

Enough to answer each distinct question once – typically four to seven. Beyond that, additional filters usually correlate with existing ones, narrowing the output without adding information.

Why does my screen only return companies from one sector?

Almost always because a criterion is sector-characteristic rather than company-characteristic. Leverage, margin and asset-turnover norms vary enormously between sectors, so an absolute threshold on any of them selects sectors first and companies second. Compare within sector instead.

Should screening use fundamental or technical criteria?

They answer different questions – fundamentals describe the business, technicals describe the price and its liquidity. Many screens use fundamentals to define the eligible set and technical or liquidity measures to determine whether a position can actually be taken.

Screener · 8 July 2026

Screening criteria that survive contact with the market

Most screens return either four companies or four hundred. How to choose criteria that narrow a universe without accidentally encoding a single sector, and how to sanity-check a screen before trusting it.

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A screen is a hypothesis written in filters. Most fail in one of two ways: so loose that the output is unusable, or so tight that it returns a handful of companies which share one accidental characteristic – usually a sector.

Start from the universe, not the filters

Before any criterion is applied, decide what is eligible. This decision does more to shape results than the filters that follow, and it is the one most often left implicit.

Market capitalisation floor – excludes companies too small to trade in your size.
Minimum average traded value – the practical constraint. A qualifying company you cannot enter without moving the price is not a result.
Listing history – ratios computed on two quarters of data are noise.
Exclusions – sectors where standard ratios do not mean what they usually mean, financials being the common case.

The eligibility rules at the top do more to shape the result than the filters below them — and are the step most often left implicit.

One criterion per question

Each filter should express a distinct question. Stacking three that measure the same underlying property does not triple the strength of the test – it narrows the output while adding no information.

Question	Typical criterion	Watch for
Is it growing?	Revenue growth over 3 years	One-off acquisitions inflating the trend
Is growth profitable?	Operating margin, trend	Margins that expand only by cutting investment
Is it financed safely?	Debt-to-equity, interest cover	Meaningless for financials
Does capital earn a return?	Return on capital employed	Distorted by asset-light structures
Is it liquid enough?	Average traded value	Thin names passing on a single spike day

Distinct questions, and criteria that answer them

Five criteria answering five questions is a stronger screen than fifteen answering the same three. If two filters correlate above roughly 0.8 across your universe, one is redundant.

Ranking beats hard cutoffs

A hard threshold discards a company that misses by a rounding error while keeping one that scrapes past on every measure. Percentile ranking each criterion and combining the ranks avoids that cliff edge and produces an ordered list rather than a binary pass.

Score = Σ wⱼ × percentile_rank(criterion j)

wⱼ is the weight on criterion j. Equal weights are the honest default unless you can justify otherwise.

Sanity-checking a screen

Before acting on any screen, run four checks. Each one catches a distinct failure mode.

01Count the results. Fewer than ten and the criteria are probably encoding something accidental; more than a hundred and nothing has been narrowed.
02Check the sector spread. If 70% of results sit in one sector, the screen is a sector bet wearing a fundamental disguise.
03Remove one criterion at a time. If dropping any single filter changes the output completely, the screen is balanced on that one filter alone.
04Run it on a date twelve months ago using only data available then. If the results are unrecognisable, the screen is unstable rather than selective.

Common questions

How many criteria should a stock screen use?: Enough to answer each distinct question once – typically four to seven. Beyond that, additional filters usually correlate with existing ones, narrowing the output without adding information.
Why does my screen only return companies from one sector?: Almost always because a criterion is sector-characteristic rather than company-characteristic. Leverage, margin and asset-turnover norms vary enormously between sectors, so an absolute threshold on any of them selects sectors first and companies second. Compare within sector instead.
Should screening use fundamental or technical criteria?: They answer different questions – fundamentals describe the business, technicals describe the price and its liquidity. Many screens use fundamentals to define the eligible set and technical or liquidity measures to determine whether a position can actually be taken.

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