High-Frequency Traders Use 50-Year-Old Wireless Tech 395
jfruh writes "In the world of high-frequency stock trading, every millisecond is money. That's why many firms are getting information and sending big orders not through modern fiber-optic networks, but using line-of-site microwave repeaters, a technology that's over 50 years old. Because electromagnetic radiation passes more quickly through air than glass, and takes a more direct route, the older technology is seeing something of a renaissance."
where is the random? (Score:2, Interesting)
the market reflects the intrinsic value of the companies instead of behaving as a high-tech casino.
If it needs quick transmission of information, then it does reflect reality. It would be a casino if it depended on random factors, in which case no information transmission would be needed.
Haters gonna hate, but when you have infrastructure you can profit from economy of scale. If you want to profit you must invest, it's the reality of life.
The guy who has a dedicated link to the stock market will profit more than the guy who depends on his home broadband modem, same as the guy who has a thirty-ton eighteen wheeler will profit more from hauling cargo than the guy who depends on his 1.5 ton pick-up truck.
Re:Great... (Score:5, Interesting)
There is a reason why people who need numbers that are provably random, compute a hash value of stock indexes. Wall Street has build the world's most sophisticated (P)RNG.
All these stories about traders needing ultralow latencies is a symptom of a fundamentally broken system. There are places where low latencies add value, stock trading is not one of them. Reduce the latency of everybody involved in the stock market, and nobody will have gained anything (except from the tech companies selling the technology being used).
The system should be modified to be round based rather than real-time. 10 seconds per round is long enough that all traders can have equal access regardless of how far they are from the stock exchange, and it is short enough that it won't be a hindrance to long-term investors. A round could spend a couple of seconds executing the trades, then publish the results, add another couple of seconds for communication, and traders will still have six seconds for calculations before the deadline for the next trading round.
With such a round based system you will change from competing on having the shortest distance to competing on having the best algorithms. Nobody will get an unfair advantage by having a shorter distance. Even if somebody does have one second more for calculations due to shorter distance, somebody further away can make up for that by a small increase in processing power. This is different from the latency based game, where no amount of processing power can make up for the additional latency.
Re:where is the random? (Score:3, Interesting)
By the way, I spoke to a trader who writes these algorithms.
She (yeah, she) told me that she thought it was evil, but she is paid too well to say anything. She seriously makes a half million USD per year AND has a private account in the trading system that returns 3% PER DAY.
Yikes.
10 seconds per order should be law imho (Score:5, Interesting)
Thousands of orders are placed and pulled every second, even every millisecond. There is a steady flow of orders being placed and pulled.
Consider this: Is an order to buy or sell a stock which is pulled within a millisecond a real order, or is it just market manipulation?