As you are probably aware, internet is full of stock market data providers. While some products let you download data for free, some carry a price tag - which varies from a few hundred rupees to few thousand rupees. A new trader is obviously confused to see such a wide range in pricing. This article aims to discuss some of the aspects that a trader must consider before choosing a data vendor.Which stock market data is generally available for free ?
How data vendors can afford a cheap price tag for intraday data ? To put it the other words, why there is so much of difference between the cost of intraday data offered by many data providers ?
Broadly, stock market traders use 2 types of data namely, End Of Day data
and Intraday Data
. Intraday data is further divided into delayed intraday data
and real time intraday data.
Most stock exchanges in the world make their end of day data available on their websites after market hours. Users can download this data free of cost. Also some software programmers write utilities to download this data directly from the website without having to visit the site. Writing such utilities is a one-time and simpler job and does not involve any significant maintenance cost. For these reasons, you will find many applications on internet which offer to download EOD data from exchange websites free of cost.
Intraday data providers source their data broadly from 3 sources - namely from websites (for example Yahoo Finance, Google and MSN Finance, etc.)
Applications falling under this category are installed on client's computer and they keep querying website servers for data. The application providers do not have to invest any money in installing and maintaining the data servers, leased lines, etc. because the data is already available on websites and internet line of the client is used to fetch the data. Hence data vendors who provide data from websites like yahoo finance can offer their product at cheapest price.from trading platforms provided by brokers (for example Odin, TTAdvance, TradeTiger,etc.)
Here too, the case is more or less similar. The only difference is - instead of Yahoo or other sites, these application providers extract the data from the trading platforms provided by the broker. Again - since data vendors do not have to maintain any data servers, dedicated leased line connections, etc., their products are available at cheaper prices.
The above 2 types of vendors are also called as snake oil saleman
in the industry.from exchange directly (for example Globaldatafeeds.in, eSignal, Reuters, etc.)
The case is entirely different here. These data vendors source their data directly from the stock exchange i.e. through a legal channel. The application providers falling in this category make significant investment in installing their data servers in worldclass environment, leased line connections, redundant server connections to take care of any failures, skilled manpower to install and maintain the setup, etc.. They also need to pay fixed yearly license fees (ranging in several lakhs of rupees) alongwith per user charges to stock exchange. For these reasons, the price of their products is comparatively higher than other 2 types of providers.What are the advantages of free end of day / cheap intraday stock market data ?
Well - the most obvious advantage is - you don't pay any money to use them. What are the disadvantages of free end of day / cheap intraday stock market data ?
Who should use free / cheap stock market data ?
- Free EOD data only contains OHLCV values. It does not contain other fundamental fields like EPS, yield, etc. - which are also considered by EOD traders to decide their entries / exits.
- When any application is available as free service, the providers are not obligated to provide any additional features. Timely updates and bug fixing alongwith continuous application development can be significantly hampered. In short, you are at the mercy of the application provider.
- The source of cheap market data is either websites like Yahoo Finance or Trading Platforms like Odin. Any change in website underlying structure, new application version can suddenly stop the data flow - without any notice and it can take from days to month to bring a fix.
- The update frequency is usually 5 seconds or more and the data flow is intermittent.
- The data fetched from websites and trading applications is a stateless data. If you miss any ticks because of internet connection problems or for any other reasons, you won't know about it till the time the market gets over / the data is backfilled by the data vendor. This often results in different real time data during market hours than after market hours / backfill.
- The data is not reliable - the prices shown do not match with rates shown on exchange website.
- There is usually a delay involved.
- Limited no. of symbols are available.
- Only OHLCV data is available. Time and Sales data - like Bid, Ask, Bid-Ask sizes as well as data like change, % change, trade size, Open Interest is generally not available.
- Realtime Quotes Window (Quotes Monitor) is generally absent.
- Applications which featch data from websites are pull type applications. Several queries are sent to websites to fetch the data - resulting in higher bandwidth and CPU usage.
If you trade on the basis of end of day data and if any application is fetching EOD data from the exchange directly, you can use free EOD data available.Intraday data from websites and trading platforms is suitable for studies only
- at the most, it is ok for beginners. Professional traders don't use intraday data
from sources like Yahoo Finance
for viewing streming live charts
and for their realtime trading. They earn much more than the difference in the cost of the data very easily. Because they understand that accurate, fast, realtime data is everything