Is my Realtime Data Feed Actually Delayed???
I'll bet that hundreds of thousands of dollars have been lost by daytraders who thought their datafeed was realtime, when actually it was delayed by 5 seconds, 10 seconds or even a minute or two. Worse yet, this can happen with reputable data vendors, and without notice.
Typically, the datafeed might drift into a delayed situation during an extremely active time, especially at the open, or after Alan Greenspan identifies some kind of "irrational exuberance" and goes on TV with the news. This was a persistent problem late last year and early this year with the satellite feed from PC Quote. Their data was actually several minutes delayed at the open, but did they notify their customers who were chronically affected? Not to me, they didn't.
So how can we protect ourselves to ensure that our datafeed is actually 'realtime'. Your best bet is to find a somewhat inactive stock that doesn't have any ISLD orders currently posted. Then place a bid on that stock at a price way, way below the current inside bid and wait to see how long it takes for your ISLD bid to be reflected in your Level II display. It should take One to three seconds for an ISLD quote to show up on Nasdaq, this is normal. But if your quote fails to show up for much longer then your datafeed has a problem.
Note: If you don't have Level II data, this obviously won't work for you. A higher risk test is to find an inactive stock with a very wide spread, such as 42 bid, 43 1/2 asked. Then place an ISLD bid at 42 1/8 and see how long it takes the inside bid price to change on your Level I data. Be aware that you have some risk of getting filled on this order. With either test, don't bother ordering more than 100 shares.
If you determine that your data feed is delayed, find out why and kick some butt. Delayed data feed kills daytraders. Get an immediate explanation and do not trade based on extensively delayed data. If your datafeed is delayed by 45 seconds, and WXYZ looks like a great buy currently at 18 to 18 1/16, recognize that the stock may actually already be at 18 5/8 to 18 3/4. You can't be successful with substantially delayed data, don't even try. |
