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Old 10-06-2011, 08:16 PM
Shawn W. Cooke Shawn W. Cooke is offline
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Default Excel for Trading

For years Microsoft Excel has been known as a household general purpose spreadsheet application. Very few people know the capabilities Excel offers to the Trading Community. Excel for Trading (which I’ll refer to as “Excel Trading”) has been adopted by the trading profession to do some pretty heavy lifting (so to speak). In this article we’ll discuss the following:

-Excel Trading for portfolio management (what most people assume is the most Excel can do)
-Excel Trading for Stock Pairs (simultaneous entries)
-Excel Trading for Stock Baskets (longs and shorts being entered for many positions at a time)

The first bullet above points to some pretty boring stuff. In fact, most of the talk in public trading forums about Excel Trading pertains to sheets that can manage how you’ve performed (past tense) with single stock strategies (snore, snore). This is certainly not what the pros are doing with Excel. In fact, I know several people who are not only managing a few hundred active stock pairs with Excel, but they are also using it for decision making on entries and exits. And if you read on, you’ll see that Excel Trading has really been pushed to its limits in other areas.

My main use for Excel Trading has been trading baskets of stocks. Allow me to elaborate a little. Since trading is all about probabilities, I really don’t care what I am trading or how many positions I have to trade to steer the probabilities in my favor. If I can get 50 cents a day on any instrument (whether a single instrument, a pair of stocks or basket of stocks), I can make a living. Excel Trading has made that much easier for me.

The easiest thing for any trader to do is trade the S&P Emini because it’s cheap to open an account and you can get the leverage you need pretty easy. But the S&P is made up of a pretty diverse group of stocks. There are 9 totally different sectors in this index and the price action of certain sectors when compared to others says a lot about market sentiment. Excel Trading offers the benefit of being able to split the S&P into the pieces that are being favored on a particular day. Going long the riskier sectors or stocks and short the safe haven sectors or stocks when the market shows its mood.

Entering a massive order of up to eighty or so positions all with one click may seem like a tall order but Excel Trading makes it easy. Calculations are made to allocate capital equally into both the long and short legs of the trade. Then the same calculations can be made to insure that within each leg, each stock is given a pre-determined amount of capital. With Excel trading, all of this is set well in advance and can be done within seconds.

Quite often, most people who explore this style of trading are curious about both, the strategies and analysis, as well as, the Excel Trading Spreadsheet itself. For more information on both, go to:
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basket trading, excel trading, trading spreadsheet

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