Hello Fellow ChartWatchers!
At StockCharts.com, we go to great lengths to make sure that our indicator values are calculated correctly as discussed in that article. Here's a repeat article from 2010 that talks about how we work hard to make sure that the data used in those calculations is as accurate as possible. Enjoy. - Chip
On Data Accuracy at StockCharts.com
First off, I want to talk about the differences between intraday data and daily data with respect to accuracy. The key thing to keep in mind here is that after the stock markets close, the daily quote (open, high, low, close and volume) for each stock is audited by the exchanges. That means that the people at the exchange go back and review all of the trades for each stock - tossing out any incorrect numbers - and then reissue the "official" values for open, high, low, close and volume for that stock. In order to make sure we have the "official" numbers, we recollect the daily data from our data vendors several times each day after the market closes. Our goal is to have "official" numbers in our database for every stock's daily values.
Having accurate daily values is important for several reasons:
- The exchanges try very hard to publish accurate daily quotes and we want to take advantage of their efforts.
- Daily data can be cross-checked from multiple public sources like Yahoo Finance and Bloomberg.
- Daily data is used to create weekly and monthly data bars.
The bottom line is that we work really hard to collect accurate daily data from our data vendors every trading day. Intraday data is a completely different story however.
Unlike daily data, Intraday data "is what it is." The exchanges do not audit intraday data values and issue corrections. There aren't any other public sources where intraday data can be cross checked. Intraday data is essentially a running record of what our data feed told us the stock was trading at during each minute of the trading day. If a bad data point gets into the datafeed somehow, we faithfully record and preserve it. Intraday data is the "chaotic wild west" of Wall Street.
That said, we still work hard to fix intraday data once it gets off the datafeed and into our databases (which happens after the markets close each day). Once the data is "ours" we can go in a fix any blatantly obvious problems like spikes and dropouts. Unfortunately, without anything else to compare our intraday data to, we often aren't sure if a spike is real or not. In those cases, we'll err on the side of caution.
ADJUSTING HISTORICAL DATA
Let me state this clearly: StockCharts.com adjusts our historical price data to eliminate the "artificial" effects of splits, distributions and dividends.
Those adjustments ensure that our technical indicators provide accurate signals at all times. Without those adjustments, incorrect buy and sell signals would occur on our charts and in our scan results whenever a stock undergoes a split, dividend or distribution because those events cause gaps to appear on the chart.
When we first created this website, we consulted all of the experts we could find on this subject. Should we adjust for splits? What about dividends and distributions? Should we adjust our data even for really small stuff that no one else notices? "Adjust your data for everything no matter how small" they said. Experts like Carl Swenlin and John Murphy were very clear - unadjusted data causes huge problems. So we did. And we have since the beginning over 10 years ago. Our goal remains the same - adjust all historical data to eliminate those "artificial" gaps.
The downside to adjusting our data is that our charts should not be used to determine past buy and sell prices. Often - around tax time - we get questions about this. "My broker said I bought this stock at $50 but your chart shows that it was at $25 on that date." Don't do that. Your broker's records are for tax purposes. Our charts are for technical analysis.
MAINTAINING DATA ACCURACY
Unfortunately, data accuracy is a never-ending struggle. We have several people here dedicated to keeping our databases in synch with the hundreds of ticker changes and updates that happen "behind the scenes" each day. One of the big benefits of using StockCharts.com is that you get all of those updates "for free" as part of our service. But don't forget that there is effort - lots and lots of effort - going into keeping our data as accurate as possible.
And yes, from time to time we miss things. We are always glad to hear from our users about a data issue that we can fix. Anything that helps us improve our data accuracy is welcome.
So as I said last time, we are fanatical about accuracy here at StockCharts because we know that our users are also fanatical about accuracy. And we will continue working hard to ensure that our charts remain the most accurate anywhere on the Internet.
- Chip
