How to Get the Most from Your Trading Data Feeds

Andrew Carpenter
October 10, 2017

Are you making the best trading decisions possible? If you're not using trading data feeds effectively, chances are good that you're missing out on valuable trading knowledge.

When you're looking to win the stock market game, you don't just need information - you need to know how to use it. We'll break down what you need to know about how to read the data effectively.

What Are Trading Data Feeds?

Financial data feeds are provided by data vendors to give the latest publicly available stock market data, all in one place. Real-time data feeds are among the most popular since these allow traders to get the most up-to-date information throughout the day. Some traders will also look at past data, which can be helpful in understanding trends and predicting what could happen next in the market. The internet has made information more readily available than ever before, which means more different kinds of data can be factored into your trading decisions. The wider variety of data you can work with, the clearer picture you'll get of the market.

Types of Trading Data and How to Use Them

There is a wide variety of trading data out there - as there should be, so you can make the best-informed decisions possible. It can all seem a bit confusing if you don't know exactly what you're looking at. In this blog, we'll take a look at the major different types of trading data that you'll find. We'll also give you some ideas of how to use the information for each type.

1. Stock Quotes

Stock quotes form the basis of anyone's trading methodology. Your trading feed can provide you with stock quotes that are updated in real time, so you can see exactly what's happening with any stocks you have your eyes on. When you have the most up-to-date stock quotes, you can get a good idea of what the market conditions are, which helps you predict what will happen next. Looking back at past stock quotes will also let you better understand how market patterns work.

Keep in mind that when looking at stock quotes from the past, they may need to be adjusted due to mergers and spinoffs, as well as splits, dividends, and other changes.

2. Stock Fundamentals

Analyzing the stock fundamentals is another tried-and-true part of good market analysis. Conducting fundamental analysis gives you one of the most realistic ideas of how valuable a company really is, which can help you in your trading decisions.

The reason fundamental analysis is so effective is that all businesses tend to operate in more or less the same way. This makes them easy to compare, as long as you have the right data - such as what you can get from trading data feeds.

Companies exist for one reason: to make a profit by selling goods or services. This means they all do similar things to achieve this goal. All businesses put a certain amount of money towards marketing and promotion. They all spend a certain amount on employee salaries, too. Businesses also put some money towards research and testing of new products, and they get income in part from their investors.It is remarkable how easy it is to compare businesses in vastly different fields when you look at it this way. Whether it's an appliance manufacturer or a software firm, the above things are still happening.

The best part for you about this list of activities is that they are all measurable in terms of finances. This means that if you have data from different companies, you can compare how much they each spend on research and salaries, versus how much they take in from investments, for example. Instead of looking at stock quotes alone, this information lets you get a better look at the company you would be investing in, so you can really know if it's the right decision or not. You can look at the present, real-time data, as well as the past, so you can see if a company's current activity is part of an ongoing pattern or not.

3. Quarterly Earnings Estimates

This is the next type of information that you're most likely to use from trading data feeds. Taking a look at stock quotes and fundamentals gets you off to a good start. However, quarterly earnings estimates are important because these look to the future, instead of just looking at past and present data. Earnings affect stock quotes, because future earnings are where the stock prices ultimately come from. The other financial data can only look backwards from the present moment. It's the quarterly earnings that give information that can change those stock quotes and fundamentals in future months.

4. Company Behavior

Another great way to look to the future is to take a look at what the company is doing, or planning on doing. Your trading data feeds can alert you to upcoming splits, mergers, trades, and other actions that will directly or indirectly affect the market. What a company's management has decided to do can give you a window into how successful they feel the company is at the moment. For example, a company would probably not acquire another company unless they had good financial prospects. When you analyze a company's actions, you can better prepare your portfolio for any changes, and take advantage of opportunities that arise. This doesn't mean you'll automatically buy or sell anytime a company does something. It just means you can be an informed investor and be ready to spring when the time comes.

Final Thoughts

The amount of available data about the stock market will only grow in the future. As modern technology becomes more precise and accessible, traders will be able to base their decisions on a growing list of information. Start now by learning the basics, and you'll quickly see how trading data feeds make a difference for your portfolio. Once you have a grasp on the four major information sources above, you can more quickly incorporate any new information that comes your way.

Looking for the right data feed to subscribe to? Take a look at what we have to offer here.