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Setup Dedicated Machine Chicago - My experience
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Setup Dedicated Machine Chicago - My experience

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Setup Dedicated Machine Chicago - My experience - Update 7/1

After much deliberation I just set up a dedicated server for my auto trading strategy via Ninjatrader. I am writing this post to provide information to others who might be considering the same path. I debated doing this for the last year.

I would not recommend going down this route if you manually make trades as probably will not help you. If you trade manually may even slow you down because placing orders through remote server will eat up any latency advantage you may have gained. Also reliability while important is not as critical on a manual machine because you are always watching it and can call your broker and get out of trades if your machine goes down or disconnects. But anyone who has an auto trade system should seriously consider the benefits of using a server closer to the exchanges and the reliability a good data center can provide. Being on auto pilot has certain risks that can be lowered although not eliminated with a dedicated machine in a data center.

The system I was using at home was very fast and very powerful with decent latency (for home system) but with my hard earned capital at risk everyday I wanted something better. I will continue to use my home system as a backup and for backtesting. So my investment there will not go to waste

My main two reasons for doing this were latency and reliability.

I am paranoid about my auto trading system. There are just so many things that can go wrong and I want to eliminate as many problems as possible. They all can't be eliminated but where I can I want to protect myself. I try to watch my trades once my system alerts me that one has been taken. But there are times I can't watch which has it's risk. So system risk mitigation is paramount especially when I can't monitor a trade directly.

Latency

After switching to dedicated server in Chicago I now have latency in low single digits which makes me sleep better trading CL crude futures. Latency at home was 43 to 53 ms to Chicago. There was no way to overcome the distance from my home to exchanges in Chicago. So solution was to get a dedicated server in Chicago. Wow what a difference a closer server with direct connections into exchanges makes on a ping. I cant even get single digit latency by pinging a server in my own town on my home system much less to Chicago. Going from 50ms to single digit mm is quite a difference and worth the cost of a dedicated server close to the exchange even without the reliability advantages.

Reliability

While in some ways I liked the fact my home trading machine was sitting right beside me I could not reproduce the reliability of an outside dedicated server. Redundant power back up, internet connections etc can be reproduced at home to a degree. But not at a level that I was ever comfortable with or found affordable. Lets face it I am not going to hook a generator to my house in case power goes down. I also found dual wan router situations to work in a limited way but was not satisfied the way NT handled disconnects. The seamless way a data center handles redundant internet connections should work much better. I also really like the fact if my outside server goes down I will be notified via email because I have it ping monitored. If I was out and my home trading machine went down could not be notified because machine down sitting behind router could not notify me since it was down after all. Maybe third party services that could overcome that but I think would have problem accessing machine disconnect behind router.

I decided to go with steadfast networks Steadfast Networks :: Chicago Web Hosting, Dedicated Servers, and Colocation. They seem to get great reviews and I like the fact they are largely geared toward traders. I also like the fact their servers sitting at 350 E Cermak Rd, Chicago, IL. It is my understanding they are directly connected to the exchanges thus the incredibly low latency. I can't comment on whether they are a good company or bad other than reviews I have read and my account setup experience. But after a few months of using will update based on my experience.

My experience from signing up for a windows 2008 machine to deploying my NT setup on the machine took maybe 90 minutes or so. So was easy and smooth. Email tech support was fast and responsive to my questions during setup.

The dedicated system I chose was the

Atom D510 1.66Ghz 1MB Cache
500 GB SATA II Hard Drive
2 GB DDR2 SDRAM


The above cost $99.95 plus $20 for windows 2008 per month. I was a little hesitant about the Atom D510 having enough power to run NT. But seems to be running it fine so far. I may be tempted to bump my specs latter but the cost almost doubles so we will see how the Atom does. I will not use it for backtesting so I think will be fine.

I chose dedicated over a VPN or cloud solution. Using a VPN or cloud would lower costs but risk reliability. Most VPN's are oversold and I did not want other users on the same VPN to potentially bring my system down. As far as cloud goes I think you run into same problem but even on a larger scale. So the risk to reliability just not worth the savings imo. One bad incident could cost exponentially more than the difference between Dedicated and VPN. If my goal is to eliminate as many risks as possible I determined dedicated was only way to go.

If anyone has any questions I would be glad to answer about my experience. My intent with this post was not to plug steadfast networks but to try and relay my experience thus far as I know many traders debate going down this path.

Update 6/8/2011:

I have been running NT7 with couple of live charts on dedicated server for a few days. I mentioned in my original post that the configuration I went with was the Atom D510. I also mentioned my reservations about the Atom D510 having enough power to handle NT.

I have been running performance monitor in windows 2008 and for the most part the processor is only taxing system around 5%. So to live trade via NT the Atom 510 seems to handle it with no problem. I have a much more powerful system to do my backtesting on so will not use the Atom in that regard. Only thing that might give a performance bump is to upgrade system with a raptor or ssd drive as well as more ram. Although I am not sure that will cause trades to be executed faster.



Update: Latency

I have been running ping tests to 64.202.118.5 which from what I understand is a close as you can get to zenfire servers that allow a ping. I don't think this is their actual order server.

I am getting sub 1ms ping which is fantastic. Windows only measures in 1ms increments so don't know how far below 1ms. It is so low I wonder if those servers are not in same building. That is what you call blazing fast.

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Update 7/6

Update 7/6

Okay here is the low down with Steadfast Networks.

I ended up moving from the Atom. Even though it may run NT okay most of the time I think it is under powered. So I bumped up to a Core duo machine that should run NT7 with ease. Unless back testing I do not think NT really uses more than 1 or 2 cores anyway. I wanted to get away with using the Atom even though I knew better. I liked the cheaper price but if going to pay money for server really is better to pay extra and get what you need. I am a penny pincher but in the trading world there areas you should not pinch. Actually the cost is quite small compared to trading profits and a year can be paid for in a few trades so why pinch.

My initial exchange with Steadfast on the matter was not so good but was a misunderstanding. Steadfast bent over backwards to keep me as a customer so I am happy. I do like the fact they concentrate on traders. They do not focus on leasing servers for web hosting. I think they did at one time but now concentrate more on the financial markets.

Their prices are not the highest out there but not the lowest either. But I think you get a much better network than most. I have spoken with others about other Chicago based server providers that even have very low latency and offer some better deals hardware wise but have nightmare stories about servers going down, disconnections etc. However, Steadfast Networks has a very good reputation among users which is why I am willing to pay more. There are times you get what you pay for especially in server market.

I will update again in the future any network or hardware issues that arise or don't arise and how Steadfast responds.

Update 8/23/2011

After 3 months of using a dedicated server in Chicago with sub 1ms ping I can say it makes a significant improvemnet to my fills. I typically use limit orders on my bot. When I was using my own machine at my house even with decent residential latency it just does not compare to being in Chicago.

I use range bars and if a limit gets jumped on bar open and next bar prints my entry orders will cancel by design. So I would quite often miss entries that never would get filled. To many jumped orders creates problems with my expectancy. I am happy to report after switching to a server in Chicago in 3 months I have not missed one entry. I get filled every time like clockwork.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; August 23rd, 2011 at 06:23 PM.
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Latency is often cited as an important driver in making this kind of decision. However, I seldom get any information on before/after in terms of trading results. What have you found?

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HowardCohodas View Post
Latency is often cited as an important driver in making this kind of decision. However, I seldom get any information on before/after in terms of trading results. What have you found?

Howard is one of those things that could be tested and measured directly. But to do it would need to trade from two different places and compare results. I have not gone to that extent. However, I am convinced lower latency will help me on an instrument like CL. I use limit orders so increases my chances that my order gets there first. If I was using market orders would also give me chance at a quicker fill and possibly better price.

Using limits on fills I have seen my order jumped many times on CL and not fill. Almost always this punishes me on the win side and and not the loss. If more speed gets me a a better chance of not getting jumped even on a few orders the lower latency will pay off. I am in and out of these trades fairly fast so faster execution can't hurt that is for sure.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; June 7th, 2011 at 04:14 PM.
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I have always thought about the benefits of using a remote server and got as far as using one for a while, but could never get away from the concern that someone (at the hosting company) would copy the strategy. It would be the ultimate letdown - after spending years to get somewhere then upload it to a server, and, just when it proves itself in real trading, what is there to stop that? (But I appreciate this may be the ultimate negative statement!)

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SPTrading View Post
I have always thought about the benefits of using a remote server and got as far as using one for a while, but could never get away from the concern that someone (at the hosting company) would copy the strategy. It would be the ultimate letdown - after spending years to get somewhere then upload it to a server, and, just when it proves itself in real trading, what is there to stop that? (But I appreciate this may be the ultimate negative statement!)

Sptrading

They give a password but you can change it inside of server 2008. On a dedicated it is your machine and no one else has access to it. Your provider would have to hack into to it just like an outsider unless you gave them permission. You have the administrative rights and in windows server 2008 there are a lot of security rules and logs you can setup. Nothing is full proof just like someone could potentially hack into your home system and get your data. Anything connected to internet carries inherit risk. But I am at least as comfortable in that regard as I was with my home system.

I don't think your statement is negative as we need to be paranoid. It is something everyone has to consider.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; June 7th, 2011 at 04:15 PM.
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liquidcci,

But this is the big difference: the system is not located in your home. Therefore the system is totally accessible to anyone with access to the server room. I am sure it is an easy matter to clone the hard drive without you ever knowing: if you are asking them to back up the system, then that is being done all the time.

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liquidcci,

But this is the big difference: the system is not located in your home. Therefore the system is totally accessible to anyone with access to the server room. I am sure it is an easy matter to clone the hard drive without you ever knowing: if you are asking them to back up the system, then that is being done all the time.

Algorithms can be made opaque if this is a concern.

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liquidcci,

But this is the big difference: the system is not located in your home. Therefore the system is totally accessible to anyone with access to the server room. I am sure it is an easy matter to clone the hard drive without you ever knowing: if you are asking them to back up the system, then that is being done all the time.

Their is thousands of servers with trading bots in the World, and maybe 95% of them are losing money. Why tring to steal a losing bot ?
The problem is different if someone is 100% sure that the algo is a good one which makes money, and also knows where is your server located, and is able to copy interesting data.
I think the risk for @liquidcci is null.

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liquidcci,

But this is the big difference: the system is not located in your home. Therefore the system is totally accessible to anyone with access to the server room. I am sure it is an easy matter to clone the hard drive without you ever knowing: if you are asking them to back up the system, then that is being done all the time.

Like sam mentioned I think risks is this is area is null or at least very close to it. I can't say it is absolute impossible. But these data centers are guarded and very few people are allowed in rooms where servers are located. These rooms are racks full of hundreds or even thousands of servers. Identifying who had a profitable strategy would be next to impossible I would think as they have no way to monitor a system while trading unless they hacked in from the outside while a bot was running. But windows server 2008 properly setup is hard to crack. If someone cloned or randomly got the data of my drive it would not make much sense to them. They would essentially have to take it and backtest to figure out if strategy was worth anything which would be a lot of work. I think the hoops someone would have to jump through would be quite high and targeting small traders like us would not be worth it for a potential thief.

In home situation there is some security to a degree in that you know who has physical access to your machine. But that does not mean someone could not break in and steal it. Another situation is your house could burn down losing your data unless you stored backup off site. But storing it offsite opens you up to wondering who has access. So there are risks even in your home.

I appreciate your comments in this area as it is good to examine the risks.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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