Trading Database

A database is a collection of information. The brokerage statements of a trader, or the price and volume data of various futures contracts are both examples of a database. There are all kinds of databases, but the ones we will be concerned with relate to commodity information such as the open, high, low, and close of a future contract.

The manipulation of a database is of great importance to many traders. Manipulation is the ability to perform calculations on the data, such as a moving average of price data or any other type of study. We may then analyze the information to see how certain trading strategies compare with others.

A database language is a program designed to allow the user to access important information about the data. It is one of the most efficient ways of finding information. However, if the data require many calculations, you should look into a spreadsheet or programming language. The decision of a spreadsheet or programming language depends on the amount of data and the complexity of the calculations.

In trading, most databases consist of the price information such as the open, high, low, close, volume, and open interest. The data is usually grouped by day or some form of time. Most of the data for a data base is usually obtained either with diskettes or through modem via phone, satellite, or other source. Each computer language works with a database in different ways. Some are much more efficient than others.

A record structure pertains to how the data is organized. An individual record refers to a specific day or time of the data. For example, a typical record of futures prices may contain the date, open, high, low, close, volume, and open interest for the day. The next record will have the next day's information. The combination of all the trading days for the future constitutes a data file on the futures contract. A NYSE data file might contain the date, prices, volume, and open interest for the March 1991 contract.

A field refers to a specific element of the record. The opening price or volume figure is a field in a record. We can have all types of fields in a record.

A key or primary key is a field which uniquely identifies a record. For example, the date of January 31, 1992 uniquely identifies the opening, high, low, and closing price for the March 92 treasury bonds. A key provides a way to efficiently access large amounts of data.

One of the important considerations in designing a database is the way a record is structured. The structure of a record can have a great impact on how easy or hard it is to access or manipulate the data, or to work with other programs or databases. The database is the skeleton, or foundation, of the information system. A poorly designed database will have problems in speed, access, efficiency, and many other applications, no matter how well the programs are designed or how fast the computers may operate. The programmer must place crucial importance to the design of the database.