Do you really need live data and charting?

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John Forman - The Essentials of Trading author

One of the questions that often comes up with new traders is what kind of data feed they need to trade. The answer, of course, is “it depends.”

Obviously, someone who is going to trade on a very short-term basis (scalping and maybe day trading), needs access to real-time data. Immediate decisions have to be made based on the information, so it’s important to have direct access to prices as they happen.

For a longer-term trader, though, I would challenge the need to have a data feed at all. It is entirely possible to trade successfully as a swing or position trader without benefit of a live feed. I speak from personal experience here.

There was a time before I had access to real-time price data that I traded the futures market very profitably just using the delayed charts available for free at FutureSource. I was swing trading for the most part. My needs for data was just the identification of chart support and resistance levels. I could get that just as easily from the delayed charts as I could from the live ones.

Actually, the argument could be made that live charts introduce an unnecessary element in to one’s market analysis. Watching prices move in real-time can have a tendency to lead one toward over-analysis. That’s a very serious risk, and one which can have significant negative consequences on your trading should you fall in to that trap. I will generally look at charts based on end-of-day data just for that reason, as it takes out the intraday noise in prices when I’m looking at more a position-oriented trading strategy than a swing or short-term one.

Regardless, these days one rarely needs to actually pay for price data. Most broker/dealer trading platforms offer more than adequate charting and quote access. That’s fine for the majority of traders. If, however, you want to do backtesting and/or some more advanced analysis, then you may have to invest in a data feed. Keep in mind, though, that there is no need to pay for real-time data, or even delayed intraday prices, if your work only uses end-of-day figures.

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