So true. Colocation without a FPGA board and an expert knowledge of micro market and order book dynamics and the ability to express such in concise code nowadays makes zero sense. Did i forget a very deep pocket? Everything else is snake oil For the masses. I believe a total of 1 or 2 individuals on this whole site might possess such skillset
Would partially agree with this. Under normal trading conditions I agree the PnL difference is negligible. However, in liquidity squeezes the difference in marketable execution price between 1ms and 300ms can be several ticks. I currently have my Globex machines in 350 E Cermack and have been crunching the numbers to see if there is a valid business case to colo using these guys instead. http://www.theomne.net/dedicated-servers/ It's not clear cut at the moment, but analysis of my simulation data suggests it could be worthwhile (if coupled with some tweaks to my strategy which would shorten its time horizon during such squeezes).
What round trip times are you using to estimate your PNL for 350 E Cermack vs theomne.net? As I see news events can trigger liquidity crunch and I suspect that HFT guys turn off their algos... if they do so then it should be for a good reason. You might still get away if your algorithm can reasonably predict how far the price can get squeezed either direction in a long time frame before hand and prepare to trade accordingly. Eitherway, this needs quite a bit of backtesting.
Unless the algo is specifically targetting the trading of news events, it would be prudent to turn it off. News events typically cause markets to go into a yo-yo set of moves that is targetted at true price discovery.
I trade futures and my near the exchange colocation server often fills a tick faster than my personal computer. It always executes exits in fast markets much faster sometimes by as much as 3-4 ticks. The trading system is not HFT but orders are inline and the earlier ones get priority on the order matching engine. I used to run game servers as a kid and know that there is considerable difference when talking 30ms+ differences in response times.
What does it cost you monthly ? Is it shared or dedicated ? I take it you just establish a remote connection to the server ?
Here's a list of providers if you do futures http://www.cmegroup.com/trading/colocation/co-location-service-providers.html
Oh im not really sure, they might not be bonafide cme partners - possibly resellers; most are anyway.