Market data includes information on completed trades as well as current price and volume availability in various financial markets. Traders subscribe to the market data for their markets through their broker and will choose their market data subscriptions based upon the markets that they are going to be trading.
For example, a trader that wants to trade individual stocks will need a market data subscription to the NYSE or NASDAQ stock exchange, or whatever stock exchange the stocks they want to trade are listed on. A trader that only wants to trade a specific futures contract or several will need to request market data for those specific markets from their broker. Forex brokers typically offer Level 1 data for all their product offers, while some also offer Level II market data for all their offers.
With forex brokers, you don't need to subscribe to the data. When you log into your trading platform it should already be available to you. Market data is usually available is two different subscriptions depending upon the markets in question , Level I markets data and Level II market data.
Level I market data includes all of the standard trading information for a market, which is the following:. Level II market data includes all of the standard trading information for a market Level I market data and some additional trading information:. Level I market data provides all of the trading information that is required to display a graphical chart of a market, and the time and sales of a market.
Level II market data provides additional trading information which is most often used by day traders in an attempt to make short-term predictions on the direction of the price.
Many new traders do not know which level of market data they will need, and therefore subscribe to all of the possible market data. Since you pay a fee for each market's data, every month, subscribing to unnecessary data results in unnecessary trading costs.
Most traders only require Level I market data because Level I market data provides all of the trading information that is needed to display the price charts that they will use to perform analysis and make trading decisions. For many traders, watching the constant flurry of changing bids and ask prices on the Level II will result in information overload, which could actually have a detrimental effect as opposed to a positive one.
If you are a new trader, then you only need level I market data for the specific markets you want to trade. Opt to keep your costs as low as possible at the beginner of your journey. If want to trade more markets later on, or try using Level II data, you can always tell your broker to add it on later. Updated September 18, The Correct Way to Choose Market Data If you are a new trader, then you only need level I market data for the specific markets you want to trade.More...