Page 28 - Trading #101 Course – Part One: Trading Basics

TRADING #101 COURSE – PART ONE: TRADING BASICS /2017-10-06

How fast does your data need to be?

Decide on what data speed you will need. Typically, the faster the data the more
expensive it will be. The way you determine the speed you will need is by deciding
what the time frame of your trading will be.

• Real-time data – Day Trader
• Delayed data – Position Trader
• End-of-day data – Investor

If you plan on investing or position trading you can do with end-of-day data. Determine
what your budget allows for and what type of trading you will be most profitable with.

Your Data Feed Is Your Lifeline
Live streaming price and volume data is your lifeline to the markets and gives you
minute-by-minute and tick-by-tick readings on what is happening in the market at every
given moment. There are many ways you can get data delivered to you. The quality
and speed of the data you receive will vary depending on the way it is delivered.

Very often, not always, when you get data from a broker it is filtered and delayed and it
is not the same quality as you would get from a data vendor or trading engine that
specializes in only data. So, it is important to weigh the importance of the quality of the
data you receive vs. the cost of getting the data.

Depending on your budget, either quality or cost may be a greater priority than the
other, and only you can weigh those decisions to determine the best solution to achieve
the greatest net profit.

The speed at which live data is delivered to your screen can change your decision
making significantly. Some day traders will do a head-to-head test side-by-side of two
data feeds (or charting platforms) to see if the timing and signals that are generated
match. The goal is to see which in the test provides the best data (and signals) with little
or no delay.

Things that can slow down data and signals are poor band width, system bugs and
bottlenecks, etc. What you as a trader must decide is are you getting reliable
information from your data feed, and are you able to make reliable trading decisions
with that data to ultimately be profitable in the marketplace.

Paying Exchange Fees

Ultimately all price and volume data comes directly from the exchange that is being
traded. Anyone that receives data from the exchange must pay an exchange fee which
covers the exchange’s cost of doing business.

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