Hi, the city I live in is one of the few that has Google Fiber. It's supposed to have "a connection that is 100 times faster than today's average broadband speeds." As far as execution, latency, and data quality would having Google Fiber over just a fast broadband connection make much of a difference? Just how important is the connection speed in the whole scheme of things?
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Thanks for the reply, so do you think Fiber would help with latency and execution because it could get the order to the exchange faster, or would it even make a difference since it travels to the broker first?
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@SpencerEng Fiber probably will not help much with latency. My guess is will get marginally better than cable. But much of what affects latency is distance. So have to remove distance as a factor by locating on a server close to exchange. It makes a massive difference.
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You will have fiber between your router and the hop (router) which is in your city. After that, it will be fiber too (I presume), but it's already in fiber after this point, so you'll only have a gain during the first meters/miles. After your first hop, you may have like a dozen of routers, so you will be a bit faster at the beginning of the race, but the gain will be in micro-seconds (micro, not milli), so at the end of the race the difference will be invisible.
I have no idea of the pricing, but it's extremely confortable to have a lot of bandwidth and if it was me I'll take, but it won't change the latency to your market gateways.
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Assuming one trades from San Diego from a exchange in Chicago with a latency of about 200 msec between the two cities. Then the trader acquires a server in Chicago near the Exchange and cuts down the execution latency almost to a few msec.
Now, here is the question:
One still has to communicate with the server in Chicago from San Diego to place an order. I assume there would be a 200 msec latency before the Server in Chicago receives instructions for executing that order.
So, regardless of having a server near the exchange, there will always be a 200 msec latency before execution from the time one sends an order. Wouldn't that be the case? If so, how does a trader 200 msec away from the exchange benefit from a server near the exchange for fast execution.
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If your manually click trading, ie the order originates on your PC, then yes. Your order still has to go from your computer to the colocated server to the exchange.
If your running any sort of automated strategy though, the order originates from that server, and the only latency is between the colocated server and the exchange. You will still have the 200ms latency on you seeing what your server did, but that latency doesn't exist between the server and the exchange.
Last edited by SMCJB; January 13th, 2014 at 10:16 PM.
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