What is Financial & Stock Market Data?
Financial market data refers to trade-related data, encompassing information on financial instruments and assets across thousands of global markets. Such instruments can include stocks, shares, or derivatives. Stock market data is categorized in terms of pre-trade and post-trade data. Pre-trade data involves the bid/ask data needed to be able to price a financial instrument, while post-trade data includes the last trade price and other information related to the transaction.
Trading venues (exchanges or other multilateral trading facilities) supply this data, which is then used predominantly by traders and investors in a variety of ways. For example, the information garnered can influence traders’ decisions on whether to enter or exit trades or impact investors’ evaluations about the market risk surrounding a certain asset. Market data enables the end-user to identify current or historical trends and stay up-to-date of share market news, thereby allowing them to forecast for the future and make judgments accordingly.
Who Use Financial & Stock Market Data and for What?
Stock trading usually involves buying and selling stocks constantly in an attempt to time the market. On the whole, market data unveils the attractiveness of a particular market, essentially providing a deep insight into the financial condition of a given market. It is useful for a wealth of different groups of people who use market data in their daily activities.
a) Stock Traders
A stock trader is an agent that buys stocks at a low price and then sells it later for a profit. For this, they deep dive into the broader set of stock market data and understand the price fluctuations on individual stocks in the market.
For individual investors, market data is a gateway to understanding previous trends, making informed decisions based on facts, and forecasting future performance. The goal of this is to drive profitability and increase returns. Investors who trade penny stocks hunt best trading opportunities and stay familiar with the current trends.
They do an in-depth research, collect financial and stock data and usually devote tons of hours in a day to stay well-versed in the basics of the stock market. Technical analysis helps to evaluate the market risks involved in the process of trading a particular asset or instrument and make a better stock trading decision.
c) Stock Brokers
Access to the financial and stock market is challenging and costly, especially for newbie investors. That is why they hire professional stock brokers. They trade securities for clients and get a commission on every trade.
They offer other services like offering share market tips and usually collect stock trading data like charting tools, stock research information, and analyst’s reports and provide them to the investors.
Investors highly rely on stock analysis as this helps them to hunt profitable stocks. For this, they take the help of financial and stock analysts. They perform technical, quantitative, and fundamental analysis of the stock market and financial data and then tell the investors how it will perform in the future for profitability and growth. They usually analyze by studying patterns, trends, and charts.
e) Wealth and asset managers
Wealth and asset managers use this data to calculate the worth of assets, which in turn helps them to guide their clients and offer them tailored solutions.
f) Finance agencies
Companies such as financial services firms frequently use market data to facilitate their research processes.
What are Typical Stock Market Data Attributes?
The most common way for traders and investors to access market data is through a financial data aggregator that gathers, regularizes, and distributes the information.
The market data for a particular instrument would include the identifier of the instrument and where it was traded, as well as details on the latest offer.
For example, data from the stock market would consist of:
- The most recent bid price (indicating the price at while a buyer is willing to pay for security)
- The most recent ask price (indicating the lowest price that a seller is willing to sell a security for)
- The time of the latest quote and trade
- The price and volume of the last sale
- The ticker symbol of a product (an abbreviation for listed security on an exchange. For example, Apple is abbreviated to AAPL)
Market data vendors usually release data on different delay frequencies: real-time, delayed, or end-of-day. Market data that is available in real-time gets delivered to the user the moment it becomes available, allowing them to make quick, informed trading decisions. Delayed market data lags approximately 10-20 minutes behind real-time quotes. Historical market data may also be offered, which is used to project pricing trends, calculate market risk on portfolios of investments and derive strategies for future trades.
How Financial and Stock Market Data is Typically Collected?
Market data vendors distribute data that is collected from different sources across the globe and translated into an accessible format, ready for consumption by the end-user. Once these data feeds are gathered, the data vendors process the information internally before delivering it to the end-user. The data is reformatted from the exchange-specific format into a more consistent format, then normalized and sorted on a real-time basis to eradicate outstanding anomalies.
Moreover, vendors may enhance their offerings with additional information such as listing information, share data, or historical data. The transportation of the data to the user can be done via broadcast, satellite, private line, VPN, or internet, depending on the user’s requirements.
1. Publicly Available Sources
Users extract financial information from publicly available sources such as exchange feeds or regulatory filings (such as an SEC filing - a financial statement or other type of formal document that is submitted to the U.S. Securities and Exchange Commission).
2. Private Firms
Some vendors get stock market graphs, charts and other valuable information that is not publicly available from private investment firms.
3. News Aggregator Websites
Users also use a variety of News Aggregator websites to hunt for press releases, news articles, and corporate announcements related to stock and financial market data.
Another method that an end-user uses is an extensive survey. They usually do it in different ways, like quick or online interviews. The key findings help them add more value to the financial and stock market data report and make an optimal decision about their stocks.
5. Reaching to Expert
Some investors also take assistance from the savvy people within the industry to take quick advice in order to have successful investing in the financial and the stock market. It includes stock investors, stock traders, research analysts, trade partners, and real estate agents.
How to Assess the Quality of Financial and Stock Market Data?
There are different factors to consider when deciding whether the quality of the data is right for your purpose. For example, whether the market data API provides the right data frequency, you need in a format that is flexible and convenient. The data can be delivered in different formats depending on how the data vendor models the data, so it is worth checking whether it is something that can be integrated with your operations.
Larger market data vendors may operate across the globe and would, therefore, be able to offer users the opportunity to access local information and expertise. Additional services offered by the data vendor can especially provide advantageous since having more information at the user’s disposal can affect the quality of decisions made.
Make sure that the data you are getting is:
- High or Low latency
Here is a step-by-step guide for assessing financial and stock market data quality:
Step 1: Make Yourself Familiar with Diverse Data Sources and Collection Methods
Making yourself familiar with the different data sources and data collection methods is crucial when it comes to evaluating financial and stock market data. Also, make sure that the sources are 100% genuine, ethical, and legal.
Step 2: Ask for References
Ask your financial data provider to provide references of their previous customers so that you can validate the data quality. You can also reach out to their past customers directly.
Step 3: Apply Data Testing (Sample Set)
Ask for a sample data set from your data provider for testing its quality.
How Stock and Financial Market Data is typically Priced?
Market data vendors may offer packages with different data latencies (data latency refers to the difference in time from when data is created at its source to when it is made available to the end-user). Lower latencies would usually be more costly and complex than higher latencies.
Below are the different pricing models for stock and financial market data we see often:
- Subscription/Licensing: users can buy market data with a recurring subscription. After you get access to API, and you will get regularly updated datasets from your data provider
- Pay Per Large Batch (One-Time Payment): Users who don’t know what to pay every month can choose to make a one-time payment. I help them to access a larger batch of high-quality stock market datasets
- Tailored Quotes for Special Needs: If you have unique needs, its best idea to explain this to your data provider. Remember, your dataset pricing will depend on your needs
Common challenges with Financial & Stock Market Data?
The prices of financial instruments can fluctuate rapidly. In cases where the real-time delivery of market data is critical, such as for high-frequency trading where every fraction of a second matter, the prompt delivery of market data is vital. The challenge that comes with this is the risk of significant latency or lags in the delivery of the data.
Since global financial data streams in from trading venues around the world, it is beneficial to confirm that the data provider is capable of providing high-speed access to stock market data that is simultaneously reliable and accurate. It will ensure that the user can receive data related to world stock markets promptly to be able to analyze it and make informed decisions.
What to Ask Financial and Stock Market Data Providers?
The process of choosing and evaluating data vendors requires deep research and clearly defined priorities. When contacting financial and stock data vendors, it is advisable to keep in mind the following questions in mind:
- Can I integrate the content with my existing workflow applications?
- Do they offer global coverage of the financial instrument or asset in question?
- Do they offer any analytical tools or additional services?
- How will the data be delivered?
- If your data fresh and updated?
- What are the diverse data sources, and can I see them?
- How solid are your references?
- How do you enforce data standards?
Big data analytics, artificial intelligence, and other cutting-edge technologies are growing how stock and financial market data is read, interpret, analyzed, and assessed. To stay ahead of your competitors and in order to maximize the returns in a short period, you need to stay updated on the stock market today.
But for this, you need to dive into the pool of right resources deeply. The best way to get access to high-quality data is top hire top data providers. They usually follow a transparent and robust methodology for data collection, and this ensures that you get real-time stock and financial market data that is 100% correct and error-free.