Slightly off-topic: what performance do you see from your HFT right now and what improvements do you expect from reducing the latency?
I would say, within the context of this thread... co-lo is simply to bring your infrastructure as close as possible to your source/target as it is required by your strategy... in some cases that might be sub-ms, in others.. not... I think we can all agree with that...
OK, lets go back - in this case, the advantage may be speed or not (I know people happily trading strats on 30ms latency....) but a lot is infrastructure and costs. I HATE having a black swan event and my systems being offline for some reason - and that is a LOT more likely outside a professional setup that ANY data center has to a MUCH larger degree than pretty much any home. And if you ever complain about the cost of colocation in this context (which may mean 100, 200 USD a month) then seriously do not even look at the prices of larger UPS, generators and such To be specific - I pay per server less than 200 USD in the USA, which includes server rent. This is a quad core + hyperthreading 16gb memory machine with a SSD and a hard disc. I have seriously sub 10ms latency to aurora (it is low single digit) and plenty of internet side bandwidth for updates, backups etc.
Not sure what you are asking. It behaves very much as designed. Almost all HFT strategies are super simple dumb things. The arms race has come to a nice steady state at the moment. The fastest of us are around 3-5 mics internal latency with a good portion of that being getting data from the card into user space. But from what I hear and my experience as well, as long as you are sub 10 it doesn't really matter that much. Most of the art then comes to managing ILinks, etc. I know of one big shop that finally went from 25 to 10. There was no increase in profit. Most of the money now is going into (went) into microwave and even laser connections between data centers. Still, the biggest places are mostly downsizing and they drive the industry so, as I said, it's kind of at a steady state now.
As some explanation garachen missed to give - there is a provider that built a microwave link from chicago to new york for market data. That is seriously faster than optical lines in place due to going more straight. It is used for arbitrage - obviously. http://www.quincy-data.com/ is IIRC the company.
Once your strategies get uploaded on another machine in a data center (either in the context of proximity hosting or a strict co-location with the exchange), what happens to IP protection? How easy is it for a data center employee/server administrator to either access your machine and download the code or simply clone the harddisk? Can someone comment on this aspect both in terms of proximity hosting and strict co-location with exchange. I am sure big and small hft firms must have grappled with this question and would have brought in specific security checks to counter the risks. Thanks.
Depends on your machine. Lets get the firs thing straight - he has access. Point. Turn off computer for mainteannce (need to work on power supply, will take machine off on a sunday - thanks), then copy hte hard disc. Get a decent computer and you can use standard practices to proctect the disc - a TPM and encrypting file system. HAve fun bypassing the TPM (which is an encryption chip). But then you need to unlock it possibly on boot - via remote KVM. Possibly. And it leaves RAM. At the end, you are one of hundreds of thousands of computers in a larger data center. Thousands in a small one. Noone knows what you do - especially when not in aurora - and chance is you just loose money.... that is HARD for a data center employee to hit properly. Anonymity is your main protection.
Colo infrastructure- So let's pretend I just signed up for a PROXIMITY colocation/ hosting with a company. And they are letting me install my platform. What are the exact steps that will happen? 1)pay for monthly fee 2)buy a computer and install it in their location? 3)if 2 is not correct. then they give you a computer and you simply install your platform on it and run your strat?? 4)do you have to pay for windows that is going to be used on their computer? 5) http://www.youtube.com/watch?v=kfCLl6X8AiU this video shows how "easy" it is to remote into a colocated computer. what I don't get is where the computer, the windows 2008 server, who pays for the internet on the computer, cables etc (or is that mostly all included in your monthly fee) ? 6) windows server 2008?? i'm guessing that's the latest?? is going through all that complexity nullified running your platforms on such an outdated computer/server i understand most of my questions are super nooby but i'm sure i'm not the only one who will benefit. thank you in advance