Is trading data supplied by non-investable traders worthless? (11)

25 July 2018
The Market Owl

In previous episodes we’ve talked about finding the 0.5% of needles in the haystack – they are the most valuable asset. They are the best trading data suppliers.

But then: is trading data supplied by the remaining 99.5% worthless? No, it isn’t. There is value to it.

Data in trading

There’s an information asymmetry when it comes to data in trading:

  • You know what you trade
  • The House knows what you trade
  • The House knows what everyone else trades
  • You don’t know what everyone else trades

The individual trader is at a disadvantage to the House. He/she ignores real time crowd-sentiment. The stuff that moves the market in the short term.

What everyone would like to know.

The problem with market makers is that they use that information to benefit their shareholders. When the crowd moves sideways, they pocket the crowd’s spread. When the crowd stampedes, they hedge their risk and gift the crowd’s real time sentiment to Wall Street (to protect their shareholders).

This is why we’re not a market maker.

We are the custodian of our community’s data. Our shareholders can’t monetise that data directly without entering into a conflict of interest with customers unless we use that data AND pay our community a fair share in the profits it generates.

Listen to the episode to know the details of how we do this.

Listen to the episode