Why is real-time data important?

Investors have many different requirements they seek in an investment platform. Some want it simple and easy-to-use, some prefer one that provides them access to a myriad of assets and funds, some opt for something that gives them reliable and actionable investment advice, while others go for a platform that allows them to make transactions in a quick and efficient manner. To know which of these many features are most important, we have conducted a poll on LinkedIn to find out.

The demand for real time data stood out at 48%, telling us that this is one of the main deciding factors in selecting a digital investment platform. Simply understood, real time data is information that is delivered immediately after collection and delivered without any delay in the timeliness of the information provided.

The availability of real-time data has fundamentally changed the investment world. An investor - novice or professional - would be able to reverse a loss into profit having leveraged access to an accurate quote with the smallest time disparity between the quote and the real-time situation. Real-time data has helped in massively minimizing risk in investments. The ability to pivot across or within asset classes and actively manage market risk is, without question, invaluable.

Carrying out transactions with even minutes-old data can result in poor decisions. This is called real-time risk. Real-time data allows an investor to move with the market almost “live” instead of playing catch up. To remain ahead of the curve and stay competitive - especially for a professional investor - working with data delivered in real time is essential. Real-time quotes show the instantaneous price and volume for a security, including the best bid and ask, versus a delayed quote - which has an approximate 15-minute lag.

For investment managers, having start-of-day positions is adequate. However, so much more can be gained with the ability to look at cash positions and open orders whilst maintaining data accuracy, all in real time. Real-time data allows a trader or a portfolio manager to see the potential gain or loss that can be incurred at that moment. It is a functionality that is essential in making the right investment decisions.

Moving systems to real-time online processing and changing the architecture of investment platforms has become a necessity to ensure that transactions are processed and positions are updated in near real time. With more complex asset classes and portfolios, real time integration almost becomes a prerequisite. The ability to have fundamental information and exchange derived real-time price quotes can be costly as it must be taken from the exchange directly or from market data vendors.

The best way would be to engage brokerage platform developers that have in-built gateways to market data providers. Professional trading platforms largely rely on technical and price action patterns analysis and recognition, which provide professional day traders the advantage of small market movements on a much higher leverage and larger risk models.

The ability to access market data also allows a retail investor (rather than an active day trader) whose investment objective typically has a medium-to-long-term view, to have, by all metrics and research, a lower risk and a much more profitable strategy.

Peter Kelleher, Chief Business Development Officer at Tradesocio peter@tradesocio.com