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The phrase "market behavior" is used to refer to the many different aspects of the market and their interactions, all about historical data analysis are mentioned.



Table of Contents

Forex Historical Data API

Financial Data Mining

Market Data: Price

Final Thoughts


In the realm of active trading, market participants spend considerable time and effort gaining insight into how a market's past behavior relates to its future. Acquiring timely market data and relevant news provides large capital allocations, with companies worldwide spending approximately US$27 billion annually on market-related information.


Whether one's approach to the market is based on fundamental or technical analysis, profitability depends on recognizing future opportunities and eliminating past mistakes. Historical data analysis is the name given to the study of market behavior over a period of time. The phrase "market behavior" is used to refer to many different aspects of the market and their interactions. Recorded market-related data such as price, volatility and volume can be measured and studied over a period of time.


Through a detailed study of the past behavior of a market, traders and investors can gain insight into the inner workings of that market. The knowledge gained in this process can be useful in developing a viable trading plan or improving an existing methodology.

  • Market knowledge: A thorough examination of the past behavior of a financial instrument or market can give the trader an idea of ​​what is normal and which of the features exhibited are very good.
  • System development: A clear definition of when, what, and how to trade in a particular market are the starting points for building a trading system. Through historical data analysis, a statistical "end" for active trading can be identified and developed.
  • Consistency: The selection of trades with a predefined expectation can give the trader confidence in the potential outcome. By understanding how a particular trade has performed over time, unexpected results can be mitigated.

It is said that those who do not understand history are doomed to repeat it. The discipline of historical data analysis aims not only to avoid the mistakes of the past but also to create a working advantage that moves towards the future.


Financial Data Mining


Data mining is the process of analyzing large and sometimes irrelevant datasets for useful information. As technology progressed, the ability to run a data mining operation became easily accessible to anyone with computing power and a database. The ability to quickly sift through large amounts of information in an attempt to identify relationships and patterns hidden within data is highly valuable in financial markets.


Historical data analysis is a data mining project that mainly focuses on datasets related to the past behavior of a particular market or financial instrument. Recorded market-related statistics such as price, volume, open interest, and various volatility metrics are just a few types of market data that can provide cause and context for seemingly erratic market movements.


Market Data: Price


Market-related data consists of many different types. As mentioned earlier, volatility measures, volume, and open interest are examples of market data. However, the most referenced form of any market-related information is pricing data.

Pricing data, or simply price, is the exact value at which both the buyer and seller of a security agree to make an exchange. By law, pricing data must be factual and independently verifiable. Because traders and investors are highly concerned with price fluctuations as they relate to a particular market or security, historical pricing data is scrutinized for useful information in estimating future price differentials.


There are two main classifications of pricing data:


End of day (EOD) data: This data is collected and reported at the end of the trading session. It is used by long-term investors, swing traders, and real day traders to gain perspective on the action of a trading session. EOD data can be grouped into weeks, months, and years.


Intraday data: The prices of security that are traded during a trading session are known as intraday data. It focuses on price fluctuations that occur in a single trading session. It can be obtained in real-time or in historical context using time-based increments or tick-tick format. Typically, intraday data is more costly than EOD data and its availability varies depending on the desired instrument or market.


For chart-based technical analysts and traders, pricing data is deciphered using automated charting software applications. Whatever classification of pricing data is chosen, the software program tasked with deciphering the data will use predefined parameters to sort and compile the dataset. Each requested parameter will represent a unique period – defined as days, minutes, or number of confirmations.


For each period, there are four key aspects of the price that prove valuable in the analysis of historical data:

Open: Open is the first price traded at the beginning of a given period.

Close: The closing is the last price traded at the end of a given period.

High: High is the largest price traded in a given period.

Low: The low is the smallest price traded in a given period.


Final Thoughts


Historical data analysis is a common way to contextualize the sometimes "irrational" behavior exhibited by markets. Through a thorough review of the past, traders and investors can eliminate many mistakes while preserving future opportunities. However, it is important to be knowledgeable about it. Errors are sometimes unavoidable, but through proper due diligence, exercises such as financial data mining and backtesting can provide the trader with invaluable insights. As with many aspects of trading, historical data analysis, when used in conjunction with other analytical tools and appropriate risk management principles, can contribute to a trader's long-term success.


Any opinions, news, research, analysis, pricing, other information, or links to third-party sites are provided as general market commentary and do not constitute investment advice. Finage will not be liable for any loss or damage, including but not limited to any loss of profits, which may arise directly or indirectly from the use or reliance on such information. We hope that this blog post will be beneficial for you. We will continue to create useful works in order to get inspired by everyone. We are sure that we will achieve splendid things altogether. Keep on following Finage for the best and more.  


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