Forex Price Data

More than any other type of trading activity, your success in forex trading depends upon receiving accurate and timely price data. That’s because the forex market moves so rapidly and small changes can mean big gains or losses.

There are any number of brokerage houses that provide real-time forex quotations. You can also use our free forex data and charts (which is historical and not updated daily for testing your system). But it takes more than just quotes to maintain an edge. You need to be able to use the data to determine how you will trade next.

That’s why so many successful forex traders invest their money in obtaining price data that can be fed into their software trading platform to produce real-time charts.

The costs of obtaining price data can range from free to hundreds of dollars per month. The price is dependant upon the number of currency pairs reported, the number of data contributors and how frequently the price data is updated.Of all those price-sensitive variables, the one that bears the most consideration is frequency of update. Pricing data is available in tick, 5-minute, 15-minute, hourly, daily, weekly, monthly and longer historical intervals. The best choice for you depends upon how you are going to use that data.

Anything other than real-time pricing (intraday) data is generally used for historical technical analysis. There are only two issues scrutinized during technical analysis:

• The currency’s current price
• The history of that currency’s price movement.

 

The result of technical analysis is used in an attempt to predict future prices. Of course, non-intraday data is not capable of providing current price data, so that element is missing in the forecast formula.

Historical data is best used for backtesting trading systems and for performing technical analysis of currency behaviour over an extended period of time. This allows you to see how currency pairs reacted to market trends and how they behaved in relationship to world or regional events.

As you move into the realm of intraday price data, the focus shifts to real-time technical analysis. This is the type of data that is imported into software-based charting systems and trading platforms. The data can change much too quickly to be manually analysed except in the case of hourly price data.

Real-time price data allows traders to continually monitor positions and to see how breaking news and other market pressures are moving currency pairs.The second element of pricing data costs is the number of currency pairs the data contains. Unless you specialize is just one pair, it’s a good idea to order at least the major pairs which include: EUR/USD, GBP/USD, USD/JPY, and USD/CHF.

The final element affecting forex pricing data is the number of data contributors. More contributors provide a better view into market activity. For the best trading results, look for pricing data that has been submitted by many contributors and avoid indicative data.

If you need forex price data, but you don’t have a charting program or software-based trading platform, you’re not out of luck. There are data providers that package their pricing data in a format that supports easy importation into Microsoft Excel.

If you are thinking about purchasing intraday FX price data feeds to help you make trading decisions in real time, you should check with your data provider to see what degree of technical support they provide an what options are available to you if the feed is lost for some reason.

The best providers will have 24/7 technical support personnel available. That’s important because the forex market is a 24 hour market during the working week. Make sure that you also ask whether that support is provided for free of if you need to subscribe to a support contract.

I’ve covered the basic issues necessary to help you make an informed decision about whether or not buying pricing data is the right move for you. Now it is up to you to use that information to your best advantage.