Investment and trading are both disciplined procedures to earn money. They assist in making lots of money but one needs to revisit his or her mistakes every time to get the maximum benefits of every trader. The use of recording trades and analysing the same has been a very traditional method for traders, investors, scalpers etc. The shorter the duration of trade, more time to analyse the same is required. For an investor it would be a piece of cake as he or she takes a position in one trade to earn approximately 20 to 40% return on a trade in a year. However traders plan to do the same within a month. On the contrary scalpers do the same work within one day or an hour or few minutes.
Hence for longer duration analysis is not much required if the stock is fundamentally strong. However in small time trading more analysis is needed to get the exact point of trade entry and exit. Hence more analysis is needed in that mode of trading and investment.
Traditional Method of Recording Trades
There are many methods to analyse and find out the trading patterns suitable in today’s time. However previously people used to note down every trade and follow the price changes there on. Furthermore the method of noting down trades became more famous with the introduction of charts. With the time passing by, the statistical methods for determining various aspects of trade came forward. This made the noting technique go out of market as it took a lot of time. Hence people started using Excel sheets to maintain the same.
Along with this when the algo method of trading and investment came forward, the excel sheets became even more active. When the trades are executed with a set formulae, then the precise analysis is needed for catching up stock and market patterns. Hence excel sheets came to be known much for recording the trades and analysis of the same.
There are multiple usage of excel sheets in markets. They are used for getting the market pricing information, brokers use it for serving their clients right, recording the trades executed and analysing them through various formulas, finding out the trade win percentage, finding the stocks having potential for buy and sell etc.
Finding Information about Market
The excel sheets were previously only used by brokers and big houses to get precise details about the stocks in one place and compare the same with others. This enabled them to take high accuracy shots for a successful trade. However nowadays with the use of google docs and its financial formulas anyone can use this technology.
For instance have a look on the screenshot attached below :-
This is the usage of google finance formulas available to access your daily market data. It gives you information about any stock you want within a fraction of seconds. All you need to do is prepare a sheet like this. The data recorded is real time data (live Data). Follow the Google Finance Website for the same.
You will find every formula for the headings on this website. However the buy and sell won’t be available there. All you need to do is compare the previous close with today’s high and low.
Useful For Analysing Trades
The excel sheets enable you to know your daily trade activities. It has become a very popular way for young guns nowadays. All you need to do is to record your trades executed for the entire day in an excel sheet. It should consider every information such as entry time, exit time, entry price, exit price, SL placement, reason for entry of trade, volume in stock while entry taken etc. Such information helps you to identify whether the decision taken by you was over risky or having a low amount of risk in comparison to the returns gained.
This information when clubbed together will enable you to identify your psychology as a trader. Thus an individual can gain his or her perfect calls and react to the same. For instance if you prefer trading in high volatility, then it can enable you to know what was the chart pattern which triggered the trade for you. Also what was the volume in particular stuck for that time and whether the entry taken was rational or not.
The major reason behind having an excel sheet is to get clarity about your individual trades. There is no hidden fact that one will never be irrational by putting data inside the sheet. This will help him or her only to grow further. Hence true data entry would trigger highly accurate analysis. Thus Excel preparation has become very famous in today’s time due to major benefits available to individuals which were previously only available to brokers or big corporate houses.