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Portfolio trackers explained – What are they?

If you want to take your investment strategy to the next level then there’s a cool bit of tech that can help. Find out all about portfolio trackers here

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If you’ve looked at investing in stocks then you are bound to have come across the term ‘portfolio tracker’ and wondered what they are.

Well wonder no more, in this article we’re going to demystify portfolio trackers and show you how you could use them to keep a clear view of your investments.

Where portfolio trackers come from

So back in the dim and distant past, a portfolio tracker could arguably be a big black book.

That’s right, tracking a portfolio is all about keeping an organized list but in the days of quill pens that meant manually.

As humanity evolved we developed computers and people started using things like Lotus 123, Microsoft money, and any number of weird and wonderful programs to keep a tab on their stocks.

Humanity made a great leap forward and the internet was born. Now, this is where portfolio trackers started to get interesting because it was possible to network with sites and systems to drag in real-time prices, making a portfolio tracker much more useful and closer to the things we see today.

One of the biggest blockers on producing an effective tracker was computing resources. In the early days, only the big brokerage houses had them, but as computing power got faster and cheaper, so trackers became available for everyone.

Now, with the advent of SaaS, it’s possible to track your portfolio using a browser on pretty much any device.

Portfolio trackers – what’s available

There are a huge number of portfolio trackers out there and whatever you are looking for, you can probably find.

A tracker can be a pretty simple listing of stocks you own. Frankly, the only benefit of this type of tracker is that it collects your numbers in one place and you may as well keep your portfolio on Excel if this is all you need.

Others will link directly with your broker and bring in trades when you make them. They will update in real-time and at any point, you can get a value for individual stocks and your portfolio as a whole.

More sophisticated trackers will be able to do all this but will also keep your trading history and will have extensive reporting capabilities.

This means that you can set up your trading strategy, buy your investments and then instantly measure your performance against your expected strategy outcome.

This is a really useful tool because we’re all susceptible to bias and we may form an overly positive view of our trading performance until we’re confronted with a real-time graph of our trading!

It goes without saying that your tracker needs to be able to track stocks on the market you are following. So for example, if you are buying stocks on the NYSE, it’s pointless having a tracker that only looks at London Stock Exchange stocks!

The best trackers will have a range of abilities including holding watchlists of possible target stocks allowing you to keep tabs on investments that suddenly fall within your trading strategy.

They’ll also allow you to build ‘sandbox’ portfolios where you can test out a range of different strategies without actually committing any money.

And if you want to look further afield and have a more sophisticated investment approach, then you can also include other financial products like derivatives, Forex, and bonds.

A good portfolio tracker will also include the ability to track any leverage you have against your portfolio and show you net positions.

What trackers aren’t for

Portfolio trackers shouldn’t be used on their own to make investment decisions. In other words, they aren’t brokers.

Instead, trackers should be used in conjunction with your own research to decide whether to buy or not.

For example, perhaps you decide that electric cars are the way forward so you start to do some research. You decide that Tesla is a good example of a business that is killing it in the world of electric transportation.

You check out their results, do a search for company information and you form the opinion that Tesla would be a good buy if the stock price was $845.

You then set your tracker to watch Tesla shares. When the share dips below your target then you buy. The decision is made by you and not the tracker.

Trackers are fast and to all intents and purposes are real-time but they aren’t for day traders.

Day traders, as the name suggests, buy and sell shares on the same day, profiting from small changes in stock price to buy and sell very rapidly and thus make their money.

But this relies on being very quick into and out of positions and whilst trackers are good, they aren’t as quick as stock scanners. In a market where thousandths of seconds can mean the difference between positive and negative trade, scanners are the way to go.

Get a tracker and get organised

If you are investing in stocks or other products then the key to a successful strategy is to get organised and this is where trackers come in.

They can help you keep a check on your current portfolio and let you know when its time to buy or sell your positions.

They can also help you develop new trading strategies by allowing you to run play accounts for free.

And a good tracker will help you watch target stocks and buy when the time is exactly right.

If you are wanting to take your investment strategy to the next level then investing in a good tracker is the way to go.

Have any thoughts on this? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.

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