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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.
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?
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.
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.
Implementing Excel for trading requires planning your spreadsheet designs to integrate everything together correctly. The key things are having accurate and well tested formulas, and being able to find what you need when you need it. Multiple simpler spreadsheets linked together or a single large spreadsheet with multiple tabs are possible. You will likely have a mixture as you build out your spreadsheets. Keep in mind that it's easier to manage small workbooks with fewer tabs and they take up less memory and run faster. The ideal approach is to design in a modular way with each spreadsheet for a specific purpose. Be careful of external links, however. These can break and slow things down, and are difficult to debug if you have a lot of them. Also, if your spreadsheets have more than 10,000 rows of data, charts, and multiple tabs together then they may slow down. It's risky to have your whole trading workflow in one Excel file. Be sure to back up your files externally.
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?
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.
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.
Implementing Excel for trading requires planning your spreadsheet designs to integrate everything together correctly. The key things are having accurate and well tested formulas, and being able to find what you need when you need it. Multiple simpler spreadsheets linked together or a single large spreadsheet with multiple tabs are possible. You will likely have a mixture as you build out your spreadsheets. Keep in mind that it's easier to manage small workbooks with fewer tabs and they take up less memory and run faster. The ideal approach is to design in a modular way with each spreadsheet for a specific purpose. Be careful of external links, however. These can break and slow things down, and are difficult to debug if you have a lot of them. Also, if your spreadsheets have more than 10,000 rows of data, charts, and multiple tabs together then they may slow down. It's risky to have your whole trading workflow in one Excel file. Be sure to back up your files externally.
Hopefully these concepts will be useful in kick starting your Excel for trading.
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