Generating trade signals and managing existing trades are two typical uses of Excel. The everyday trader often just relies on his chart software or canned technical analysis newsletters. Building your own strategies in Excel can give you increased control, efficiency and trading profitability. There are a few things you need to learn, but overall the process is normally fairly smooth.
You should first ask yourself how you might use use Excel for trading. Will you just import prices and volume data into a spreadsheet? Do you intend to generate buy/sell signals? How about tracking positions, profits and losses in a spreadsheet? Do you have an existing trading software platform you'd like to integrate with? Would you consider building a complete Excel for trading system with VBA, formulas, price imports and other features?
There are a variety of functional options you can go with. Stock and futures watch lists are popular. These can be quite elaborate with multiple prices, colors, positions, profits, losses, etc. Real time or end of day P&L reports can be built to track your performance across trades. Tracking portfolio performance and attribution is another use. A trading log where you record your trade decision steps, emotions and results on each trade can help develop discipline and consistency. The main uses for Excel in trading include signal generation, risk and trade management. Many of these data points can be charted to provide a "one look" view.
Once you have your data into Excel for trading purposes, then what will you be doing with it? You can create a position blotter, watch list, profit and loss statement, trade history log, or a big price history database. These can then be used for current day and historical trend analysis, evaluating your trading performance using common statistics like standard deviation, sharpe ratio, drawdown, maximum drawdown, etc. There are virtually unlimited uses of Excel for trading workflows.
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!
Hopefully these concepts will be useful in kick starting your Excel for trading.
You should first ask yourself how you might use use Excel for trading. Will you just import prices and volume data into a spreadsheet? Do you intend to generate buy/sell signals? How about tracking positions, profits and losses in a spreadsheet? Do you have an existing trading software platform you'd like to integrate with? Would you consider building a complete Excel for trading system with VBA, formulas, price imports and other features?
There are a variety of functional options you can go with. Stock and futures watch lists are popular. These can be quite elaborate with multiple prices, colors, positions, profits, losses, etc. Real time or end of day P&L reports can be built to track your performance across trades. Tracking portfolio performance and attribution is another use. A trading log where you record your trade decision steps, emotions and results on each trade can help develop discipline and consistency. The main uses for Excel in trading include signal generation, risk and trade management. Many of these data points can be charted to provide a "one look" view.
Once you have your data into Excel for trading purposes, then what will you be doing with it? You can create a position blotter, watch list, profit and loss statement, trade history log, or a big price history database. These can then be used for current day and historical trend analysis, evaluating your trading performance using common statistics like standard deviation, sharpe ratio, drawdown, maximum drawdown, etc. There are virtually unlimited uses of Excel for trading workflows.
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!
Hopefully these concepts will be useful in kick starting your Excel for trading.
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