Most traders like to see what the price of a market has done over time. Before the use of computers, traders would draw dots or symbols on graph paper or chalkboards to keep track of price changes over time. Today, trading software connects to feeds of historical data going back months or, depending on the financial instrument, even years.
Historical price data is usually displayed on charts
Traders can view historical prices on various types of price charts. Line charts show a single line connecting the individual price levels for each time increment. For example, a one-minute line chart of crude oil futures prices would show the closing price of crude oil at the 59 second mark of each minute, with a line connecting the individual points of data.
Other charts show the opening, closing, high, and low price levels for a given time period. For example, a daily chart of the S&P 500 (Nadex US 500) stock index would show the price of the market at the opening of regular trading hours, the official closing price at which the market settled at the end of regular trading, and the highest and lowest prices reached during the time in between.
Technical analysis & chart trading use historical prices to help make trading decisions
Technical analysis of the markets is basically the identification of patterns of price movement that help you identify a trend. For example, an upward trend is when a market is making a series of higher highs and higher lows. A downtrend is defined as a market making lower highs and lower lows.
Some traders like to know if a market is at or near a long-term high or low price. For example, if a market breaks above the highest price of the past year, that’s a significant move and may signal further bullish action. Obviously, the only way to know how the current price compares to past price extremes is to have access to historical prices.
However, swing traders and day traders are typically not as concerned with historical price data. As long as they have tick data (the smallest possible duration) for the last few days, they are able to make short-term trading decisions. Since Nadex specializes in short-term swing and day trading, the trading platform offers historical price data for the life of the current underlying futures contract or for forex, data going back several days. This is enough for the needs of most short-term traders and helps keep the platform speedy.