Why You Should Use Data When Making Investment Decisions

published Oct 04, 2018
1 min read

Data for Investment Decisions

In the modern world, data is everywhere. From the information feeds you see on Facebook and Twitter to the spreadsheets almost every workplace requires in order to function, data is truly in vogue. If you’re a retail investor (non-professional), though, data is even more important because it can influence whether or not your investment works out. From price charts to information on upcoming economic events, there are lots of options for data to be integrated into your decisions.

Price Charts

If you’re a technical analyst when it comes to trading, price charts will be your friend. Technical analysts take the view that all the relevant information in a market is expressed through trading decisions – which are, in turn, plotted on a price chart compiled when instruments were bought and sold. While for some traders there’s more to making a judgement than this, it’s definitely worth knowing what price levels your chosen instruments have sold for in the past.

That way, you can then look for patterns by using software like MetaTrader. While past patterns don’t guarantee how the future will play out, they can at least provide food for thought and suggest routes to avoid.

Recent News

Keeping up to date on the latest news is also a good move, especially if you feel a little unfamiliar or even nervous by only using price charts. If you’re planning to invest in a tech company, for example, it may be worth checking out in the news whether any of its competitors are planning an initial public offering (IPO) in the coming months – as that could affect the price of your own holding in the long term.

Knowing this might not guarantee that your own investment will work out well, but it’s something that could have an impact. Feed data from The Hammerstone draws information from numerous reputable sources like Bloomberg, and it’s always a good idea to choose this sort of reliable source.

Economic Calendar

Modern, globalised economies are complex beasts, and there are all sorts of events and incidents that can shift the value of your investment. From political milestones like government changeovers to economic events like quantitative easing announcements, there’s a lot to keep on top of.

The same goes for company announcements, such as interim and annual account releases. By having a comprehensive and well-informed economic calendar (either curated yourself or by an expert provider) on hand, you can at least make your decisions around these events – even if you can’t avoid them altogether.

Using data is essential in all sorts of ways, but it’s the sort of task that comes in extra handy when you’re running a stock portfolio. Whether it’s information on what firms’ competitors are up to or simply raw price data which condenses all the market’s knowledge into one, amateur traders are missing a golden opportunity if they don’t use data and the professionals couldn’t function without it.