Wall Street uses Excel for trading on a daily basis. The average investor or trader doesn't use Excel this way, but the techniques for implementing Excel in a trading environment are relatively simple. You just need to know how you intend to use Excel, and what kind of trading workflow works for you.
There are many ways to use Excel for trading, and your first consideration should be narrowing down your intended use of the tool. Will you use it to compute trading signals? Is your interest importing data automatically into Excel? How about calculating profits, drawdowns, risk and other analytics? Do you have many open positions you need to track? Would you like to integrate Excel with a charting platform? Are you interested in automating your workbooks with VBA to increase speed and accuracy?
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!
Hopefully these concepts will be useful in kick starting your Excel for trading.
There are many ways to use Excel for trading, and your first consideration should be narrowing down your intended use of the tool. Will you use it to compute trading signals? Is your interest importing data automatically into Excel? How about calculating profits, drawdowns, risk and other analytics? Do you have many open positions you need to track? Would you like to integrate Excel with a charting platform? Are you interested in automating your workbooks with VBA to increase speed and accuracy?
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!
Hopefully these concepts will be useful in kick starting your Excel for trading.
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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