How Do I Graph the Long Positions of Stocks?
Investors usually buy a stock in a company because they believe it will make them a good return. An investor who holds that security in his investment portfolio is said to be "long" the stock. When he later sells the stock, he no longer has a long position in that security. Graphing the long position allows an investor to visually track the shares he owns. It also help him quantify his total financial investment in the securities market.
Most people who trade stocks do not only buy and hold stocks. Some enter the market to borrow and sell securities that they do not own. This is called a short sale. It reflects an investor's short position. To graph the net long position, that investor would deduct his total short position from his total long position. For example, if an investor had sold short 6,000 shares of a stock in one account and bought 10,000 shares in another account, his net long position would be 4,000 shares. Traders and portfolio managers pay attention to their net long position, especially in pairs trade -- the act of buying and selling two different stocks simultaneously to make a profit on the price difference. Knowing the net long position of the whole portfolio can give a summary of the investor's total exposure to the stock market.
The total shares an investor holds is often benchmarked to the daily prices of the stocks in the portfolio. This helps quantify the value of his total financial investment in the stock market. One common benchmark used is the stock's closing price. The closing price of each stock is multiplied by the quantity of shares bought to give the total financial worth of the trader's portfolio. If the price of a stock closes higher than the purchase price, the trader would experience a higher return on his investment. If the closing price is lower than the purchase price, the trader could be tracking toward a potential loss or a reduction in his investment.
Investors favor real-time price benchmarks that update throughout the trading day rather than relying on the closing price. Some investors use the current bid or ask prices to see the changes in the value of their financial investments during the trading day. Electronic application programming interfaces, or APIs, are used to graph the minute-to-minute price changes throughout the day. APIs feed real-time data into a trader's spreadsheet, giving her the total or the remaining value of her investment.
With the rise of many trading applications today, most traders or investors rely on electronic platforms to graph the long position of their stocks. These established tools can feed prices through faster and with fewer performance problems than are experienced with basic spreadsheets. Although spreadsheets are great for parsing small data, traders who heavily use numerous market data would have a difficult time with spreadsheets. In this case, established web-based applications are often employed by traders, as these applications also offer a host of other reporting tools.
Victor Rogers is a professional business writer who started his career as a financial analyst on Wall Street. He later expanded his experience to content marketing for technology firms in New York City. Victor is an alumnus of St. Lawrence University, where he graduated with honors in economics and mathematics.