Contest - o8o8 Discussion

ionico posted:
Latency arbitrage

Are you suggesting this trader is located next to big data centers in London ?
He is not in his native country ?

Latency explained :
The time that elapses from the moment a signal is sent to its receipt. Since lower latency equals faster speed, high-frequency traders spend heavily to obtain the fastest computer hardware, software and data lines so as execute orders as speedily as possible and gain a competitive edge in trading. The biggest determinant of latency is the distance that the signal has to travel, or the length of the physical cable (usually fiber-optic) that carries data from one point to another. Since light in a vacuum travels at 186,000 miles per second or 186 miles a millisecond, a High Frequency Trading firm with its servers co-located right within an exchange would have a much lower latency – and hence a trading edge – than a rival firm located miles away. Interestingly, an exchange’s co-location clients receive the same amount of cable length regardless of where they are located within the exchange premises, so as to ensure that they have the same latency.