e-Forex Magazine | Viewpoint | Historical market data: an indispensible tool for informing FX trading strategies

Viewpoint : Historical market data: an indispensible tool for informing FX trading strategies

First Published in e-Forex Magazine April 2008

Jim OHagan

Jim OHagan

Interdealer-broker ICAPs Jim OHagan, Global Product Manager for EBS Market Data, discusses the crucial role historical market data plays in developing more reliable FX trading models and strategies.

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What's more important - building the fastest sports car or sourcing the fuel to run it? The two are of course symbiotic - one will not work without the other, unless you get out and push of course!The same can be said for trading in the financial markets, in particular FX, where building the smartest black box model imaginable amounts to little if it's not vigorously tested with accurate historical data, then fueled with fast, accurate data in a live environment to trigger buy/sell decisions.

Algorithmic trading techniques have gained firm foothold in electronic spot FX trading, as traders continually strive to optimise performance and add to the bottom line. To ensure orders are filled quickly enough to benefit fully from the speed of their computer-driven models, black box traders need a highly liquid and electronic market such as EBS Spot. Comprehensive, transactional historical FX market data is absolutely critical to the development of efficient trading models, which must be extensively back-tested before being deployed in live trading conditions.

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