A previous article looked at why, during their first years, traders should be guided by simple but good end-of-day systems.
Let's now look at the acquisition of these data as well the costs involved.
First, this depends on the desired target market as well as the preferred time units.
Although there are several suppliers that provide high-quality EOD data for U.S. stocks free of charge for private traders, in other countries, for example, it isn't easy to obtain correct information about price history. Those who comb through the data series for some markets will soon notice that, sometimes, there have been no adjustments for splits or that other errors have crept in.
Fortunately, there are numerous solid sources available for EOD stock data. Therefore, ultimately, it doesn't matter if traders opt for Bloomberg, Google, MSN, Yahoo or another high-quality data provider.
Recommending a specific data provider would be akin to advertising, so traders who are interested should do online research and use keywords such as "historical stock prices" or something similar.
However, traders should bear in mind day-to-day trading. Although one can easily manually trade or reconstruct EOD models, like the vast majority of the strategies from moomoc, intra-day models have to be automated.
First, traders certainly won't want to sit at their computers all day and wait to see whether an order will hit its price target. Second, during volatile times, when prices start moving quickly traders will be overwhelmed by having to manage the orders.
By contrast, traders can set up orders at the open or at the close easily already in the pre-market or during the course of a trading day (market on close) and send them through a broker to the stock exchange.
Furthermore, intra-day systems mostly work with limit entries, while EOD systems get by with market entries.
Be very careful because there is a difference between an entry that is a market-on-open order and one that is at market at 9:30 a.m. ET. A number of analyses at moomoc have confirmed systematic deviations here and show that MOO (at the opening auction) entry orders tend to produce better order executions with less slippage.
EOD systems work with the following information: opening price; daily high; daily low; and closing price.
That is more than enough for one's first years as a trader because intra-day models are complex due to the data acquisition, data quality and automation that they require. If an EOD model is good, then the trader will generate sufficient performance because trading isn't a sprint but a marathon.
Remember: People only get rich quickly in Las Vegas but not in the stock market.
This article is commentary by an independent contributor.