Not certain if you are responding to the general topic or my prior post based on the imagined system with science fiction like performance. In this case the assumption is that low latency was irrelevant since the system accurately predicts future market activity within a given time window say 10 hours. There a few seconds is irrelevant as one is dealing with the future not reacting to the present or the 10 milliseconds ago past. I would never put anything of significant value at a 3rd party site.
Maybe we need to stop pretending that everyone's doing exactly the same thing. I for one trade a short volatility black-box application that benefits very much from every second of availability I can squeeze out of the system. I have redundant colocated servers in addition to E Cermak (Seattle/Dallas) for that reason. I also have SLA agreements that I rely on. If components in one of my system goes down, hardware replacements are in place in 60 minutes. All this for less than $500 a month. A 10 mb line going to my house? Ignoring obvious issues like power outages or other disconnections, I'm also concerned about natural disaster (flood/earthquake), or even a neighbor with a weed-whacker.
I though so too until you marched in to demand that everyone stop posting and go away. If you don't like what's being discussed either offer a dfifferent prespective or leave those that care to dialogue in peace.
My perspective is stop posting and start doing. I don't want anyone to go away, just to stop talking in circles about how somoene is out to get your unwritten code. Co-lo is a joke unless you live in Guam or Phuket. Hook up with a broker that has halfway decnet quotes and an Excel DDE, create a logical, rules based strategy in Excel. Test. Test. Test... Automate... Work on next strategy?? I don't see international espionage and colocation anywhere in there.
What is your interest, vested or otherwise in who's talking and who is doing or not doing what? I don't mean to be rude but you sound parental... you want us to do X or Y at your preference? Sound we ask permission individually or as a group? Should I clean up my room now? From my own experience and that of others where I know the details, your suggestion to create a simple logical rule based strategy. works marginally at best ...< 66% Win/Loss ratio in net dollars. I havenât seen much empirical evidence that the mentally and emotionally changed decisions of millions of people are logical with much consistency. If thatâs the best you can offer, fine, but if others of us think there is something beyond what 42,000,000 people have tried, then why try to stop investigation and discovery?
colocation is a solution of network latency. if the strategy is timing critical, a latency around 10ms is lethal, then colocation is a must. otherwise, you have to build a brokerage house yourself, which is not practical for most of individuals or small hedge fund firms.
The financial giants don't predict the markets, they make them. http://en.wikipedia.org/wiki/John_Paulson
I apologize if my posts were interpreted as being rude, that was not my intent. Rabbitone's posts as well as others' are excellent however the barrier of entry to 'big bank' systems is so high that most hedge funds can't get there. I understand the desire to discuss, in theory, how to keep things save in a co-located environment. What I'm trying to convey is that the security measures being discussed are impossible to implement outside of large institutions with very deep pockets. Assuming everything is backed up (as it should be if you are discussing these types of security measures) your hardware theft/loss concerns are nil. I would venture a guess that few people have ever been inside a datacenter and have never experienced the security measures in place just to enter the facility, nor have they experienced the access restrictions and physical locking cages, lockers, etc. at your space. At that rate software/IP loss concerns are just as significant inside a co-location facility as they are inside your home or office. It is much easier to reverse engineer a strategy based on executions than it is to steal someoneâs code from a co-lo or even from an office. In practice, your strategy is only as safe as the people you expose it to â risk managers, firm partners, your partners, etc. Big banks need unique security measures because they hire âtrustworthyâ employees to work on big projects. A team of 20 people working on one HFT strategy has a lot more vulnerability than a team of 3-4 individuals with an even profit split. Again Iâm not trying to be rude but in the real world the HFT space is saturated. Big banks/firms dominate the space and the micro/nanosecond area is ultra competitive. Without order flow it is virtually impossible to carve out an edge in the low-latency HFT space. There is almost no realistic need for low-latency co-location unless you are remote. In practice, what most people actually do is get fast internet into an office or rent space at a datacenter, connect directly to quote/execution servers and put up a moderate firewall. Only the Administrators have access to the machines so the risk of IP theft is low.