Professional traders use Excel on a daily basis to generate trading signals and manage trades. Average traders tend to rely only on charting programs or poorly designed and tested systems. Adding Excel to your repertoire can bring significant benefits in terms of control, efficiency and profitability. You just need to learn a few things about Excel and how to integrate it properly into your trading process.
One of the first considerations is how you will use Excel for trading. Will you be importing price data into a spreadsheet? Will you track your positions, profits, and losses there? Do you intend to integrate it with an existing trading platform? Do you want to develop a complete Excel for trading system with VBA, charts, order entry, and such?
Importing price and volume data is one way to implement Excel for trading. This is typically done through DDE links to an internal or external pricing database. DDE links are easy to use and do a good job of updating fast moving prices, but cannot handle huge volumes. Alternately, you can import price and volume data into Excel from the Internet using web queries directly from Excel's Data from Web functionality. This is good for basic data capture of prices, volume, financial statements, etc. from Yahoo Finance, MSN Money Central, Quicken and other standard websites. Finally, you can import data into your spreadsheet using the Data from Other Sources function which allows you to use SQL Server, MS Analysis Services, XML files, and ODBC connections.
Excel for trading depends on data. Once that's imported, what will you do with the data? Good options are watch lists, blotters, P&L statements, portfolio trackers, trade logs and heat maps. These can be used for intraday or historical analysis, trading performance, risk and trade management. Analytics like delta, drawdown, maximum adverse excursion, maximum profit realized or stop loss points can be calculated and displayed. There are unlimited uses of Excel for trading so feel free to let your imagination flow.
Best practices of Excel for trading involve planning your spreadsheet workflows and relationships so everything works together correctly and you can find what you need when you need it. You have a choice here of building a multiple spreadsheet environment or creating a single workbook with lots of tabs. The prior approach is modular and tends to work well because each separate workbook is for a specific purpose, small, and easy to manage. The downside is you may need to manage lots of links and Excel links have a tendency to break and get corrupted. Big workbooks with lots of sheets can be useful in Excel for trading since you have everything in one place. However, Excel tends to bog down and the files get huge when you start using more than 10,000 rows of data, charts, and multiple tabs together. It can also be a bit risky to have your whole daily trading operation in one file. Just make sure you back up your files in an external location every day!
These ideas should help you get started using Excel for trading to improve your trade processes and increase profits with less risk.
One of the first considerations is how you will use Excel for trading. Will you be importing price data into a spreadsheet? Will you track your positions, profits, and losses there? Do you intend to integrate it with an existing trading platform? Do you want to develop a complete Excel for trading system with VBA, charts, order entry, and such?
Importing price and volume data is one way to implement Excel for trading. This is typically done through DDE links to an internal or external pricing database. DDE links are easy to use and do a good job of updating fast moving prices, but cannot handle huge volumes. Alternately, you can import price and volume data into Excel from the Internet using web queries directly from Excel's Data from Web functionality. This is good for basic data capture of prices, volume, financial statements, etc. from Yahoo Finance, MSN Money Central, Quicken and other standard websites. Finally, you can import data into your spreadsheet using the Data from Other Sources function which allows you to use SQL Server, MS Analysis Services, XML files, and ODBC connections.
Excel for trading depends on data. Once that's imported, what will you do with the data? Good options are watch lists, blotters, P&L statements, portfolio trackers, trade logs and heat maps. These can be used for intraday or historical analysis, trading performance, risk and trade management. Analytics like delta, drawdown, maximum adverse excursion, maximum profit realized or stop loss points can be calculated and displayed. There are unlimited uses of Excel for trading so feel free to let your imagination flow.
Best practices of Excel for trading involve planning your spreadsheet workflows and relationships so everything works together correctly and you can find what you need when you need it. You have a choice here of building a multiple spreadsheet environment or creating a single workbook with lots of tabs. The prior approach is modular and tends to work well because each separate workbook is for a specific purpose, small, and easy to manage. The downside is you may need to manage lots of links and Excel links have a tendency to break and get corrupted. Big workbooks with lots of sheets can be useful in Excel for trading since you have everything in one place. However, Excel tends to bog down and the files get huge when you start using more than 10,000 rows of data, charts, and multiple tabs together. It can also be a bit risky to have your whole daily trading operation in one file. Just make sure you back up your files in an external location every day!
These ideas should help you get started using Excel for trading to improve your trade processes and increase profits with less risk.
About the Author:
The best Excel for trading systems are created by using Excel's spreadsheets, formulas, and VBA code together to build a cohesive yet flexible system. Get your FREE guide on building trading models in Excel by visiting ExcelTradingModels.com
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