From trading for years and interacting with traders, I have constantly heard complaints that institutions are of the best benefit to retail traders due to lower trading costs, better platforms and access to Level 3 data. With our technology, and our partner startups through the RainMatter Fund, we have not only bridged this gap, but given retail traders an edge over institutions with better products and pricing. In this spirit of democratization, I am very excited to tell you that we are now ready to give you Level 3 or 20 depth market data access for the first time in India.
What is 20 depth data or level 3 data?
Usually when you check the market depth for any scrip, you see the best 5 bids and offers – also called Level 2 data.
Level 3 or 20 depth data market has 20 high bids and offers.
How are we presenting it to you?
The common data feed you see on the trading platform is provided by the exchange to the brokerage firm, which is then passed on to clients. The default 5 market depth is typically updated up to 3 times a second. We are fortunate that Indian exchanges provide free data feeds to their members’ trading clients, where other and developed markets charge this data from clients.
Many exchanges also have a premium data feed called Tick by Tick – TBT. As the name suggests, this data stream gives you every change in the price of a scrip bid / offer. It requires increasingly more bandwidth to stream data streams outside exchanges, which is not technically possible. So the exchanges have created a space within their premises (called “colo”, for colocation) where they share this data feed with the participants who hire the server. The presence of a colo means rapid updates to the data feed. Until now, large institutions, brokerage firms that use high-frequency arbitrage, market making, and other latency-sensitive strategies that used algorithms used to consume this data feed.
Our new system sits within the exchange colo and consumes large amounts of real-time TBT data, converts it into 20 depths for retail consumption, compresses the data, on a dedicated leased line to our data center Streams from where it is streamed back to our users on kite.
How is it useful?
This adds significant value to active traders or those who intend to trade in large amounts, which are not available to them on the limited market depth view. Placed on the rise, this could be an edge for a trader. 20 Depth Reach can help reduce the impact cost (impact cost) on large orders. And of course, Level 3 feeds tick faster and deliver more quotes.
Look at this example of Yes Bank 70 calls when the stock rose 30% and trading activity. With 20 depth you can see supply and demand in the entire price range of the call. You can not only find out whether a potentially high bid / ask can lead to support and resistance to the price, but also estimate the price at which your larger orders may be executed.
Look at this chapter on Varsity where Karthik explains how to use 20-depth to his advantage.
How do i use it?
20 Depth is now available to everyone by default. In addition, it is only available for NSE scrip (stock, and F&O – FNO). As you can imagine, this system is technically complex and is resource and bandwidth-intensive for us, and so it will be a part of our upcoming bundle of premium features. For now, it is available as a free preview.
While we are building tools and features to help our users gain an edge while trading, we are also working on a system that actively helps traders manage risk and build discipline. is. So stay with us.
Happy Trading.