Real-time market data has always been an essential tool for financial market investors, but its relevance in auto trading is on a whole different level. When investors execute trades themselves, they’re in control of every single decision being made. Algo trading, on the other hand, is carried out automatically by the algorithm and, therefore, rides heavily on market data. The feature is designed to make decisions based on everyday forecasts, and for this to happen, there has to be a consistent stream of information. Let’s discuss the many ways to leverage TradingView’s real-time data to execute automated trading strategies.
How Does Real-Time Data Work?
Speed is a fundamental principle in trading the markets, and real-time data is one feature that many investors use to beat this. Just like it sounds, this feature offers a wide range of information on everything going on in the financial markets, including live price feeds, order book data, economic news, and so much more. Access to this information guarantees minimal delays for exiting risky markets and milking opportunities that present themselves. Most platforms like TradingView offer a paid and free option, with subscription ranges to cover your trading needs. The free version works just as much, but some traders experience slight delays and restrictions on the range of asset classes. Paid offers allow access to information across multiple asset classes at ultra speed. The plans can vary from pro to pro+ and premium offers. Below are ways this tool can be used on TradingView to maximize results.
How Real-Time Data Helps With Automated Trading Strategies
Volatility and News Impact Analysis
All investment markets move according to daily economic and political positioning. The newly established Trump administration has had some effects on several investment classes in the past month. For crypto assets, these effects have been majorly positive since the government has taken a pro-crypto stance right from the start. Its impact on the dollar rate, however, might not be as positive as we’ve seen with these digital assets. During this presidency, the United States hinted at its plans to sever long-standing ties with allies like Canada and enter into a tariff war with China. There are a lot of uncertainties around what to expect from the administration in the coming months, and this explains why real-time data stands as a working solution for guiding against such impacts. Before economic and political news hits the markets and volatility ensues, your algo trading bot should have received the information required and reacted appropriately.
Risk Management and Stop Loss Automation
Retrieving the data is not where the work stops. Algorithms monitor price movements in real time to trigger stop-losses and take profit levels instantly. If the bot notices a threatening situation or movement that could spiral into further losses, it activates a risk management strategy to avoid such losses. This is particularly helpful in highly volatile markets, protecting your capital from hitting any major damages. Other risk management tools, like risk-reward ratio and position sizing, can also be used to protect your assets. Auto trading tools work well without human emotions to cloud judgment and are neutral enough to make objective decisions that can be beneficial to your portfolio.
Arbitrage
Arbitrage is a common financial practice that involves buying and selling the same assets on different platforms to benefit from small price differences. For example, imagine you find two forex brokers selling the EUR/USD pair at different rates of 1.1000 and 1.1010. This means you can buy €1 at 1.1000 from Broker A and sell at 1.1010 to Broker B. If you Buy 1,000,000 EUR from Broker A at 1.1000, spending 1,100,000 USD, and immediately sell to Broker B at 1.1010, you’ll receive 1,101,000 USD. This is 1,000 USD profit risk-free in seconds. Arbitrage strategies are particularly useful in high-frequency trading (HFT). HFT strategies capitalize on small price differences across exchanges. Real-time data helps execute arbitrage opportunities before they disappear.
Technical and Quantitative Analysis
Every market analysis carried out rides on data. For example, real-time indicators, like moving averages, start by collecting historical and real-time data, which forms the basis of all their calculations. Then, they even out price data over a period of time to highlight trends investors can act on. Your auto trading tools utilize this feature every day in making financial decisions.
Latency Reduction
The first advantage of real-time data highlighted in this article is speed and accuracy, and one major positive is that it reduces latency for investors. The lower the data latency, the better the accuracy of the execution carried out by auto-trading tools. At the same time, it ensures that algorithms don’t act on outdated information, preventing costly mistakes.
Building Data-Driven Strategies in Auto Trades
Activating a real-time data tool in your trading activities can make a significant difference as it increases efficiency in several folds. Achieving such results is easy because most advanced trading tools have it readily available, whether for free or paid with extra perks. If you use TradingView, check out the options available in the “real-time data” section of your account.
