Creating a Pareto chart is a great way to simplify your decision making process. Before you do anything else, let's take a look at some other methods of generating a Pareto chart in Excel.
There are many websites out there that offer a Pareto chart template. For example, on Google you can find hundreds of charts created in Excel. With the click of a button, they will display a Pareto chart as an image or a web page, whichever you choose.
The main problem with this is that the Pareto chart template is based on your user preferences. You are not able to customize the type of stocks you are going to display. Therefore, if you want to use a different company or stocks, you are going to have to create your own template.
No matter what company or stocks you used last time, you can always go back and re_do it. I was going to mention that using these types of templates may get a little tedious. However, I am also going to say that if you use Excel, the work involved will be very easy.
If you were to use any sort of software you are going to be working with a wide range of options. If you are willing to spend a few minutes, you can really get a good idea of how the software works. At the end of this article you will learn exactly how you can make your own templates using a Pareto chart in Excel template.
Right off the bat, you need to know that you should never use this type of charting method unless you are knowledgeable in Microsoft Excel. A Pareto chart is primarily designed for business owners and investors to understand how certain stocks relate to each other. These kinds of charts are not just limited to making stock picks.
Think about it this way. Suppose you want to try to buy a coffee company. You might have a bunch of stocks that you like.
Now, let's say that you are going to go and shop around for a coffee company and you happen to notice that two of the stocks you like are trading close together. You are going to be able to easily see the size of their market share. This is all based on their price differences.
That is why a Pareto chart is so useful because we are looking at how different businesses are affected by certain stocks. In fact, if you have seen these types of charts before, then you probably have noticed the similarities between coffee and bookstores.
As you can see, they both sell books, but only one of them is selling specific information related to the topics discussed in the book. In fact, that is the same type of information that is needed for investing. Basically, it comes down to finding the right companies to invest in.
So how do you do this? That is where this charting method comes in. You are going to need to know the three factors that determine how profitable each stock is, and then find the one that matches these factors the best.
You can download a Pareto chart template that you can use for free on the Internet. It is an Excel template that you can use for free and the important thing is that you are able to do this without having to do any of the legwork.