[nv-vn]

I think the answer is yes & no. If you come up with a sufficiently clever strategy using public data that other people haven't thought to use it's definitely doable. For example, someone with a good understanding of meteorology would've had a significant advantage a few decades ago (though trading firms have since caught on). You wouldn't need a perfect data set if the strategy isn't being used.

In terms of strategies based purely on market data, you are definitely correct. Any publicly (freely/cheaply) available market data is low resolution, lacking the full data from any point in time, and generally based on poor approximations of the actual data (elsewhere in this thread someone mentions that IEX's data is based on trades that get routed through the IEX exchange, which obviously misses any data you could get from the markets that make up 99% of the volume, dark pools, etc.).

I think the "sweet spot" is simply coming up with a strategy that nobody else has thought about, or else executing a better-known strategy more effectively than other market participants. Both are hard, but somewhat in the realm of possibility. The problem is that many people think there's free money to be made without either of these.