High Speed Trading Systems: Five Critical Considerations
Milliseconds matter. Profit and loss live and die in the space between moments, and if you're not leading the pack, you're falling behind in the world of high frequency trading. Consider the work of Hibernia Networks, currently building a low-latency, 4,600 kilometer long fiber optic cable between London and New York in an effort to shave just a few milliseconds off high frequency trading (HFT) transaction times. Once in operation next year, companies using the cable could reap millions in profit, but that's the just the beginning when it comes to HFT. Here are five critical considerations for any high-speed system.
1) Hyper Speed
""Fast"" is no longer fast enough. Instead, companies need to look for hyper speed servers; machines that don't just keep up but stay one step ahead of the competition. As a result, it's critical to look for servers using only the latest processor technology, such as Intel's Haswell CPU lines. Think it doesn't matter what processor you're using as long as it's current-gen? Think again ” some CPUs have documented ""jitter"" issues and may not provide enough throughput for HFT, while others run hot but quickly burn out, making them a hassle to repair or replace. Bottom line? For high speed trading, dedicated hyper speed is your best bet.
2) Latency
It's also important to consider latency. Large trading firms are busy snapping up microwave towers across the globe as a way to lower the latency between buy and sell orders. But these towers are simply the macro version of latency solutions, meaning HFT companies need to consider their network backbone before installing any high-speed trading system. No matter how powerful your server or how accurate your calculations, profit is out of reach if high latency means you're the last one to the trading floor.
Part of the latency solution rests with your Internet Service Provider (ISP) and your existing network structure, but server architecture is just as critical. Top-tier HFT systems should reduce data sprawl by minimizing packet size, in turn making transmission as fast as possible.
3) Room for Growth
Even the best HFT systems have upper limits ” heat and power consumption ceilings that prevent them from working faster or processing more data. The best servers on the market, however, take these limitations into account and build in two critical components: Fail-safes and speed boosts.
Fail-safes typically take the form of dedicated liquid cooling solutions. Rather than relying on in-rack cooling to do the heavy lifting, liquid cooling means servers can run hotter for longer without risk of failure. Speed boosting is also essential. Look for a system that supports voltage and frequency overclocking, allowing you to maximize performance and push beyond factory presets. Properly overclocked, the right systems can safely deliver a 25 to 40 percent boost in performance. Here, it's critical to find servers that are put through rigorous ""burn-in"" tests and won't crumble under the pressure of massive data.
4) Forecasting and Risk Analysis
Sheer compute power isn't enough to dominate the high speed trading market ” companies must be able to forecast industry trends and analyze risk, all in real time. This is especially critical as HFT comes under greater government scrutiny and companies are expected to keep detailed records of all digital transactions. As Forbes and the New York Times point out, high frequency trading offers a number of benefits including professional-grade capital mediation and lowered overall costs for traders and investors, but is also impacting ""traditional"" trading companies, prompting increased oversight.
Greater market interest and more public scrutiny mean you need an HFT system that forecasts trends quickly and accurately and using only publicly available information.
5) Parallelism
To truly perform, your high-speed trading system can't work in isolation. Market-best servers rely on the concept of parallel computing, which sees thousands or millions of calculations carried out simultaneously. This is achieved by breaking large and complex problems down into smaller and simpler parts, then solving them concurrently. To achieve this aim, HFT systems require not only multiple processor cores but also core suited to parallel tasks, such as NVIDIA GPUs or Intel Xeon Phi. With these systems, more calculations can be performed at the same time.
Stay Ahead of the High Speed Trading Curve
HFT systems are evolving to stay ahead of market curves, with some focused on pure speed while others provide sheer computational muscle. That means you need to stay of ahead of the curve with your computing solutions. The ideal solution includes hyper speed servers, easily integrates with low latency functions, provides ample room for overclocking, power for risk analysis and leading-edge parallelism.
High Speed Trading Systems: Five Critical Considerations
Milliseconds matter. Profit and loss live and die in the space between moments, and if you're not leading the pack, you're falling behind in the world of high frequency trading. Consider the work of Hibernia Networks, currently building a low-latency, 4,600 kilometer long fiber optic cable between London and New York in an effort to shave just a few milliseconds off high frequency trading (HFT) transaction times. Once in operation next year, companies using the cable could reap millions in profit, but that's the just the beginning when it comes to HFT. Here are five critical considerations for any high-speed system.
1) Hyper Speed
""Fast"" is no longer fast enough. Instead, companies need to look for hyper speed servers; machines that don't just keep up but stay one step ahead of the competition. As a result, it's critical to look for servers using only the latest processor technology, such as Intel's Haswell CPU lines. Think it doesn't matter what processor you're using as long as it's current-gen? Think again ” some CPUs have documented ""jitter"" issues and may not provide enough throughput for HFT, while others run hot but quickly burn out, making them a hassle to repair or replace. Bottom line? For high speed trading, dedicated hyper speed is your best bet.
2) Latency
It's also important to consider latency. Large trading firms are busy snapping up microwave towers across the globe as a way to lower the latency between buy and sell orders. But these towers are simply the macro version of latency solutions, meaning HFT companies need to consider their network backbone before installing any high-speed trading system. No matter how powerful your server or how accurate your calculations, profit is out of reach if high latency means you're the last one to the trading floor.
Part of the latency solution rests with your Internet Service Provider (ISP) and your existing network structure, but server architecture is just as critical. Top-tier HFT systems should reduce data sprawl by minimizing packet size, in turn making transmission as fast as possible.
3) Room for Growth
Even the best HFT systems have upper limits ” heat and power consumption ceilings that prevent them from working faster or processing more data. The best servers on the market, however, take these limitations into account and build in two critical components: Fail-safes and speed boosts.
Fail-safes typically take the form of dedicated liquid cooling solutions. Rather than relying on in-rack cooling to do the heavy lifting, liquid cooling means servers can run hotter for longer without risk of failure. Speed boosting is also essential. Look for a system that supports voltage and frequency overclocking, allowing you to maximize performance and push beyond factory presets. Properly overclocked, the right systems can safely deliver a 25 to 40 percent boost in performance. Here, it's critical to find servers that are put through rigorous ""burn-in"" tests and won't crumble under the pressure of massive data.
4) Forecasting and Risk Analysis
Sheer compute power isn't enough to dominate the high speed trading market ” companies must be able to forecast industry trends and analyze risk, all in real time. This is especially critical as HFT comes under greater government scrutiny and companies are expected to keep detailed records of all digital transactions. As Forbes and the New York Times point out, high frequency trading offers a number of benefits including professional-grade capital mediation and lowered overall costs for traders and investors, but is also impacting ""traditional"" trading companies, prompting increased oversight.
Greater market interest and more public scrutiny mean you need an HFT system that forecasts trends quickly and accurately and using only publicly available information.
5) Parallelism
To truly perform, your high-speed trading system can't work in isolation. Market-best servers rely on the concept of parallel computing, which sees thousands or millions of calculations carried out simultaneously. This is achieved by breaking large and complex problems down into smaller and simpler parts, then solving them concurrently. To achieve this aim, HFT systems require not only multiple processor cores but also core suited to parallel tasks, such as NVIDIA GPUs or Intel Xeon Phi. With these systems, more calculations can be performed at the same time.
Stay Ahead of the High Speed Trading Curve
HFT systems are evolving to stay ahead of market curves, with some focused on pure speed while others provide sheer computational muscle. That means you need to stay of ahead of the curve with your computing solutions. The ideal solution includes hyper speed servers, easily integrates with low latency functions, provides ample room for overclocking, power for risk analysis and leading-edge parallelism.