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The fact that high-frequency trading is big and specialized enough to merit hardware vendors catering specifically to their niche shouldn't have been surprising

The fact that high-frequency trading is big and specialized enough to merit hardware vendors catering specifically to their niche shouldn't have been surprising to me, but totally was. In general, though, Cloudflare's posts continue to be totally fascinating.

samstave 13y ago
Yeah - and that buffer size is really telling there.
revelation 13y ago
Lots and lots of investment for high frequency trading. For example, a new undersea cable to cut 6ms between London and New York [1]. 1: http://www.telegraph.co.uk/technology/news/8753784/The-300m-cable-that-will-save-traders-milliseconds.html http://www.telegraph.co.uk/technology/news/8753784/The-300m-...
- mscarborough 13y ago
  I hope I'm not the only one missing the point of HFT. Yes, you can make a lot of money buying and selling stocks, but what is HFT actually contributing to the economy other than paying HR costs for its employees?
  - tlrobinson 13y ago
    "Liquidity" I don't claim to understand it completely, but that's the justification I've heard before.
  - jpau 13y ago
    Proponents argue HFT provides liquidity and increased market efficiency. Market efficiency relies on extreme competition between investors that are highly intelligent and able to make quick decisions. When you can sum up much of those decisions in algorithms, what better way to deliver competition than HFT? Opponents argue markets were efficient enough pre-HFT and that any benefits delivered by HFT are more 'academic' than practical. Opponents also argue that the level of uncertainty ("inexperience") with HFT brings more risks than argued benefits, as well as all of the "usual" criticisms of 'trading' vs. 'investing'. As you may be able to tell, I myself am sitting on the fence on this issue, albeit with both feet pointing towards the opponents' side.
  - NickNameNick 13y ago
    Theoretically, it increases liquidity - the chances of a trade executing, and it keeps the trading price of the traded stocks close to their real value, whatever that is. In practice, it's probably fairly neutral, so long as no-one is playing silly b@#$%^rs, front-running other people's trades or similar.
  - sturadnidge 13y ago
    You might misunderstand what the purpose of HFT is - it's not about making a small margin on a huge volume of trades, it's all about order fulfillment (liquidity). I'll try and illustrate with a contrived example. Say i want to buy 1000 shares at no more than $1 each. By using HFT, a trading firm can put together the order 'package' by combining many smaller trades at varying prices such that the average price comes out at the lowest (or target) price. The competitive edge for a trading firm comes from being able to consistently fulfill orders, meaning they get more orders / customers. Does that kind of explain the utility of HFT? Yes it allows a trading firm to make more money, but they way they do that is by providing a better service - not by simply exeucting a huge volume of trades and making fractions of a cent from each one.
    - zimbatm 13y ago
      Has the liquidity argument been proved in practice ? I'm not really close to trading so every time I hear about HFT is when they wreak havoc in market because of maladjusted algorithms.
    - mscarborough 13y ago
      Yes, I will take this into account, thank you. Either way, it doesn't seem to be about actually funding companies. Maybe stock trades can help influence companies to change strategies or leaders, but I don't see the point of doing it in a forum from which the companies will never see the investment. I don't think I understand the stock market as being anything more than a gambling game for people with a ton of money. Not sure what the IPOs of Facebook, Groupon, or Zynga did for anyone other than top execs who were already making a ton of cash per year, or the traders who bought and sold options.
Andys 13y ago
Intel made special editions (4.4ghz dual core) of some Xeons that went into some servers Dell sold for HFT. http://www.cpu-world.com/CPUs/Xeon/Intel-Xeon%20X5698%20-%20AT80614007314AA.html http://www.cpu-world.com/CPUs/Xeon/Intel-Xeon%20X5698%20-%20...

samstave 13y ago

Yeah - and that buffer size is really telling there.

revelation 13y ago

Lots and lots of investment for high frequency trading. For example, a new undersea cable to cut 6ms between London and New York [1]. 1: http://www.telegraph.co.uk/technology/news/8753784/The-300m-cable-that-will-save-traders-milliseconds.html http://www.telegraph.co.uk/technology/news/8753784/The-300m-...

mscarborough 13y ago
I hope I'm not the only one missing the point of HFT. Yes, you can make a lot of money buying and selling stocks, but what is HFT actually contributing to the economy other than paying HR costs for its employees?
- tlrobinson 13y ago
  "Liquidity" I don't claim to understand it completely, but that's the justification I've heard before.
- jpau 13y ago
  Proponents argue HFT provides liquidity and increased market efficiency. Market efficiency relies on extreme competition between investors that are highly intelligent and able to make quick decisions. When you can sum up much of those decisions in algorithms, what better way to deliver competition than HFT? Opponents argue markets were efficient enough pre-HFT and that any benefits delivered by HFT are more 'academic' than practical. Opponents also argue that the level of uncertainty ("inexperience") with HFT brings more risks than argued benefits, as well as all of the "usual" criticisms of 'trading' vs. 'investing'. As you may be able to tell, I myself am sitting on the fence on this issue, albeit with both feet pointing towards the opponents' side.
- NickNameNick 13y ago
  Theoretically, it increases liquidity - the chances of a trade executing, and it keeps the trading price of the traded stocks close to their real value, whatever that is. In practice, it's probably fairly neutral, so long as no-one is playing silly b@#$%^rs, front-running other people's trades or similar.
- sturadnidge 13y ago
  You might misunderstand what the purpose of HFT is - it's not about making a small margin on a huge volume of trades, it's all about order fulfillment (liquidity). I'll try and illustrate with a contrived example. Say i want to buy 1000 shares at no more than $1 each. By using HFT, a trading firm can put together the order 'package' by combining many smaller trades at varying prices such that the average price comes out at the lowest (or target) price. The competitive edge for a trading firm comes from being able to consistently fulfill orders, meaning they get more orders / customers. Does that kind of explain the utility of HFT? Yes it allows a trading firm to make more money, but they way they do that is by providing a better service - not by simply exeucting a huge volume of trades and making fractions of a cent from each one.
  - zimbatm 13y ago
    Has the liquidity argument been proved in practice ? I'm not really close to trading so every time I hear about HFT is when they wreak havoc in market because of maladjusted algorithms.
  - mscarborough 13y ago
    Yes, I will take this into account, thank you. Either way, it doesn't seem to be about actually funding companies. Maybe stock trades can help influence companies to change strategies or leaders, but I don't see the point of doing it in a forum from which the companies will never see the investment. I don't think I understand the stock market as being anything more than a gambling game for people with a ton of money. Not sure what the IPOs of Facebook, Groupon, or Zynga did for anyone other than top execs who were already making a ton of cash per year, or the traders who bought and sold options.

Andys 13y ago

Intel made special editions (4.4ghz dual core) of some Xeons that went into some servers Dell sold for HFT. http://www.cpu-world.com/CPUs/Xeon/Intel-Xeon%20X5698%20-%20AT80614007314AA.html http://www.cpu-world.com/CPUs/Xeon/Intel-Xeon%20X5698%20-%20...