Former Manchester United and Netherlands defender Stam, 44, succeeded Brian McDermott in June.
He saw a young Royals side beat Swindon 2-1 in a pre-season friendly on Tuesday after coming from a goal down.
"We need to have a big squad this season with quality, experience and young talent," he told BBC Sport.
"We have to look at everyone. We need to know the strongest XI, but also those who are going to give us depth in the squad.
Reading start their Championship campaign at home to Preston on 6 August and Stam is still undecided about who will line-up in the Madejski Stadium opener.
"We've a good idea, but we're still working on it," he told BBC Radio Berkshire.
"I'm not the type of manager who is going to pick 11 players and they will be the team for the season.
"I look at the opponent too and their qualities and what qualities we need on the pitch at the time.
"We're still working on a new system and how everyone knows how to implement it at the right moment."
Reading manager Jaap Stam admits he does not yet know his strongest side as he continues preparations for his first season in charge of the club.