Saturday, December 09, 2006

Two Datafeeds

Do you use one datafeed for trading and another for charting?
EG: your broker is IB, but your charts are build with ESignal data
I used to do so. I had ESignal for years, then for a time I used DTN/IQ.
 
Some time ago I realized that for my trading it was more important to have one reality.
 
Trading is stressfull enough at times. In a fast market you might want to enter now, as you got a signal, you might have to decide in a split second whether to exit or to add to your trade.
 
But in a fast market datafeeds tend to diverge and at times ESignal and DTN/IQ tended to diverge considerably from IB's data.
 
What did that mean for me?
Do nothing, I couldn't because I did not know what was real, what was the reality I could trade.
 
My charts showed me one reality, the reality ESignal was giving it's customers, IB gave me another reality printing higher or lower prices. Which was real? I could not decide what was real and I missed trades. In retrospect I realized that especially in fast markets IB's approach to send price snapshots instead of every tick was a lot more accurate than ESignals or DTN/IQ's approach, who are committed to give you every tick creating a backlog in fast markets, as suddenly the Internet is no longer able to transfer every tick fast enough to your computer.
 
I have an IB account, I trade IB prices and I realized that I could trade at IB prices even in fast markets, so why should I not trust that reality?
I use minute charts, no Tick or Volume or Range charts, because it just doesn't matter what charts you use. Minute charts don't care whether you use a real tick datafeed or a snapshot datafeed as IB provides it. The charts will look the same.
 
Having a backup broker, having a backup datafeed is fine and a good precaution, but I prefer to have my chart data and tradedata coming from one source. That way I don't have to question my data and worry whether the signal I got is really there or just caused by a divergence between datafeeds.

3 comments:

Anonymous said...

I find that using IB datafeed on my Ensign Charts and using IB platform to trade would be a better setup. Plus with Bracket Trader using DOM is the best setup I ever have.

Having two datafeeds is quite disastrous when both are not tally and it could be quite frustrating as you get many bad trades.

yellow and blue said...

hi croc... do you think that using IB with vol charts is also Ok?

Globetrader said...

Sure it is ok. Actually it just doesn't matter what type of chart you use. Minute, tick, range or volume charts, they all work. I use minute charts, as I like to be able to compare charts at a glance. But otherwise just use what works for you.