Pick Winning Trades with Performance Charts
Because I received a lot of questions about one of my tools, the Performance Chart, I decided to write a quick post about it:
It is a line graph that shows up to 20 stocks at the same time, comparing their price history based on a common starting point. In the above example, the starting point was 12 months back.
As time passes, price changes between stocks start to become clear and it is easy to distinguish between better and worse performing investments.
How is it done?
I am using Google Sheets to create this chart, following these steps:
- Download historical stock prices with the GOOGLEFINANCE() formula
- Choose a common reference point
- Convert historical prices into percentage changes based on the reference price
- Create a line chart from these percentages
Sounds like a lot of work…
Yep… that’s why you can get your own copy from my shared document from the link at the end of the post.
No need for any coding, just enter the stock symbols you like and you get your performance chart right away.
So what’s so great about it?
There are many ways to benefit from that chart, here are my two favorite uses:
1) Compare performance of closely related stocks to decide which one to buy
Let’s say you want to invest in a company that manufactures and sells soft drinks. Which one should you buy?
Assuming that trends tend to continue, choose the one that has best performed in the past.
Open the Google Sheet and select the tab called “SP500_List”.
- Open the Sub-Sector filter Menu
- Click “Clear”
- Scroll down and select “Soft Drinks”
- Click “OK”
After that, the list will show all companies that are related to soft drink manufacturing. Select and copy the 4 stock symbols, then switch to the “Performance_Chart” tab.
Paste the 4 stock symbols into the white column space on the left. If there are any other stocks listed there, delete them first.
After that, the performance chart will update itself (you need to be connected to the Internet).
In this case, MNST outperforms all others, so it would be my first buying choice.
2) Find the best stocks out of many
This works as well when you don’t really care about similar companies.
If you have many stocks on your watchlist, copy-paste 20 stocks at a time into the chart and note down the top 1 or 2. Repeat until you went through your entire list. This will leave you with a small list of high-performance stocks.
And if it’s still too many… just do it again. Just this time compare your highest performance stocks with each other.
It’s not a silver bullet…
Keep in mind that markets change direction all the time. While I believe that trends tend to continue, trends can and will reverse at some point.
What it means is… always keep your risk measures in place to protect your capital. Set a stop price. Invest small amounts per trade and don’t do all your trades at the same time.
Get your Performance Chart copy now
If you want your own copy, below is the link to the shared document.
Let me know if you have any questions.
Get the Performance Chart link:
Click on the image or button below to get the link.
Get your own copy of the Performance Chart on Google Sheets.
It can be used to:
- Compare performance of similar companies
- Distinguish between average and top performing stocks
- Filter through large watchlists quickly
- Prioritize buy and sell decisions