What is a Fitch Sheet?
A Fitch sheet is a report containing a list of historical trades in a given security. It is highly detailed, down-to-the-second information. It is commonly used for investigations nowadays. This kind of report is similar to, but more detailed than, a broker's time and sales data.
- The data on Fitch sheets are similar to Time-and-Sales data, but more comprehensive.
- The name came from Fitch Inc.'s blue sheets which recorded trade data back in the 1950s and 1060s.
- Quotron (now part of Thompson Reuters) first delivered this data electronically in the 1960s, but it is still delivered electronically today.
How a Fitch Sheet Works
Fitch sheets include the price and size of each trade, the exchange on which the trade was executed, and the time of the trade, down to the second. Traders obtain such information from financial data banks and use the information for a variety of activities including trade confirmations, technical analysis to buttress a potential trade and forensic analysis to uncover potentially illegal activity.
The term Fitch Sheet came from a paper report first issued before 1950 by Francis Emory Fitch Inc. (later renamed Fitch Data) called the Fitch Trade Record, which listed every trade made on the New York Stock Exchange. In the 1950s Fitch partnered with IBM to create electronic data for their Fitch Blue Sheets product. Later Quotron first delivered Fitch sheets electronically in 1960 and became a dominant player in the provision of financial data for investors for two decades before Citicorp absorbed them.
The rise of Bloomberg terminals created competitive pressure for Quotron in the 1980s, eventually leading to the company’s absorption into Reuters Holdings. Quotron continues to operate as a subsidiary of Thomson Reuters, as historical data on security trades continues to play a key role in many traders’ decision-making processes.
Use of Fitch Sheets in Technical Analysis
Fitch Sheets data, like any time and sales data, can be useful for analysts and traders who generally use two basic forms of analysis to guide their trading decisions. Analysts involved in fundamental analysis base their decisions on publicly available information regarding a company’s financial position. A company’s profit and loss statement, cash flow statement and balance sheet provide a snapshot of the current health of the business, along with historical trends analysts can use to generate a model of the firm’s future performance.
Those involved in technical analysis, however, assume that a company’s stock price will typically reflect its fundamentals. Historical data on stock prices and trade volume form the basis for technical analysis, which seeks to identify patterns that help to predict the future movement of stock prices over the short or medium term. Traders look at the direction of price changes and the period of time over which those changes occur to identify trends which they can then use to identify opportunities. Trading platforms produce a variety of charts highlighting trade data in different ways so that traders can identify peaks and valleys, draw long-term trend lines, and identify common themes.
For example, many technical traders rely on features such as double top or double bottom patterns. Technical traders expect that a set of peaks or valleys spaced closely together on a chart after a longer upward or downward price trend may delineate support or resistance levels from which tactical risk-and-reward-based decisions can be made. At these points, technical analysis suggests market participants may collectively make trades that keep the stock above or below key price points, giving the analyst or trader an opportunity to capitalize on the likelihood of a reversal in the trend leading to gains larger than the capital they would need to initially risk on their trade.