What is Real-Time Market Data & How To Use It

What is real-time market data?

The term "real-time market data" refers to the insightful stock market data created from every transaction on Stock Market Exchanges. In a sense, real-time market data such as the latest bid & ask, last trade, volume, and overall order flow is a by-product of a stock exchange's business of facilitating stock trades between active buyers and sellers. The exchanges then monetize this data by partnering with certain data providers who package the data up and deliver it to end-users.

Market data originates from stock exchanges such as NASDAQ and Nyse. When companies get big enough, they can choose to list themselves publicly on one of these exchanges. Once the company is listed publicly, it begins to “trade” on the open market. This means that investors can make a “bid” or an “ask” for shares of that particular company’s stock. When the “bid” and the “ask” price converge, a transaction happens, and the agreed-upon price becomes the “stock price” at that moment in time.

Real-time data provides specific information that can help you make better-informed business choices before placing a trade and making other important decisions. This type of data collection is unbelievably valuable and can be used by any industry for a multitude of purposes. Essentially, businesses of all sizes and users around the world rely on real-time analytics because it gives them the opportunity to react and deal with situations right away, leads to successful business growth, and reduces operational costs.  

Here’s the catch - that type of bid/ask activity is happening, in real-time, for tens of thousands of companies, across dozens of exchanges. Each exchange is responsible for recording those prices and delivering them in real time to the market. As you can imagine, the “real-time” stock price from NASDAQ will probably look different than the “real-time” stock price at Nyse (since different buyers and sellers are bidding and asking for different prices on each exchange). That makes it difficult to get an idea of what the true price of a security is at any given moment in time. This is where regulation comes into play.

A SIP feed is technically the most accurate representation of a stock’s price in real-time, but there are other, more affordable versions of real-time stock price data that are suitable for most consumers of this data. You can buy a real-time feed directly from a single exchange (like NASDAQ basic, or from IEX), but since a single exchange will have a smaller amount of trading happening, the price won’t be the same as the SIP. Some exchanges and data providers get creative with their own versions of real-time data, and package data feeds up that are very close to “real-time.”

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What is the difference between real-time and 15 minute delayed stock quotes?

The difference between real-time stock quotes and delayed stock quotes is that real-time quotes show current prices and volume information for a stock that is trading on the exchange, while delayed quotes take approximately 15 minutes to generate that specific type of stock market information. 

Almost all stock exchanges charge an “exchange fee” for accessing real-time data which can be upwards of $10,000 a month. There are also “display fees” for any data consumers that are using the data in a public fashion (inside of a website, or an email newsletter). “Per user fees” can come into play alongside display fees if you have a lot of eyeballs looking at the data feed. Lastly, the price can increase substantially if you are designated as a “professional” versus a “non professional” user of the data. Exchanges are very strict about auditing and policing these fees, so it’s important to choose a data provider that can help make sure you comply and navigate these complexities.

It may sound ridiculous (because it is) but by just slightly delaying the speed with which the stock prices flow through to end users, you can avoid a heck of a lot of these fees. For high-frequency traders - that may not be an option, and in that case it makes sense to shell out the big bucks for a true real-time SIP feed. In most cases, however, investors, traders, and app-developers can get away with a slight delay to the data in order to save money. For example, Intrinio offers a 15-minute delayed SIP data feed for just $500/month - major savings! 

What type of information is included in a typical real-time quote (RTQ)?

• Stock symbol
• Latest stock price
• Trading volume
• 52-week highs and lows
• Bid and ask price
• Underlying stock exchange

What are the top seven business benefits of real-time data analytics?

• Access to valuable market data without delay
• Address operational problems and malfunctions promptly
• Monitor organization’s infrastructure quickly
• Make better, faster business decisions
• Reduce functional costs across departments
• Prepare achievable forecasts and projections
• Keep track of employees and departments efficiently
• Improve overall customer service experience

It is perfectly clear that having access to real-time data creates several opportunities for your business. At the end of the day, having this type of financial information is important because it leads to business growth, lower operational costs, and smarter business-related decisions.  

How to Use Real-time Market Data

If you find yourself in need of a true real-time data feed and can’t get away with delayed data, make sure to work with a quality provider like Intrinio who can make sure you subscribe to the best product, follow the rules correctly, and get the data flowing quickly.

Finding a good data provider is the first and most important step. After that, expect to wade through some pretty serious paperwork. Stock exchanges require quite a bit of this before they will approve you for access to a real-time data feed. Once you are approved, your data provider will help you get connected (usually via an API or a WebSocket) and show your developers where to find documentation, SDKs, and resources. A good provider will also provide a support contact in case there are any issues with the real-time data connection.

Real-time data is the heart of most investment strategies, and while it may seem complicated - don’t be discouraged. Once you get connected and see the data flowing in, you’ll realize it’s worth it. If you are looking for access to a quality real-time stock data feed, feel free to chat with team Intrinio to get set up with a free trial. We can’t wait to see what you build!

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