The importance of 'ping' - latency/connection speed in trading.

G

gotmessner

Hey,

I was wondering what everyone's thoughts are on the speed which you are connected to the exchange.

Say for example you are in Australia and you connect to Eurex to trade the DAX - Your 'ping' is around 250-350 - while not slow - the traders in Europe have a slight edge in data-speed.

How important is this for the scalping trader - is it a huge disadvantage?

Your thoughts...

Thanks.
 
search and read the relevant posts by FuturesTrader71, i think he says the ping latency is critical for scalping - fyi my ping latency to IB's swiss server is 45ms and to their U.S. server is 79ms, i am in Europe.
 
Depends largely on your style. If you enter at market chasing breakouts it will certainly have an effect. If you enter resting orders waiting for the price to come to you it may be totally irrelevant.

Trent
 
Don't forget that:

1) your reaction time is 250ms to 750ms depending on the day etc
2) ping times are normally both ways so the latency is often half the ping
3) if you use a stoplimit for your breakout it is on IBs (or whoever's) server

All things to think about.
 
Quote from gotmessner:

Hey,

I was wondering what everyone's thoughts are on the speed which you are connected to the exchange.

Say for example you are in Australia and you connect to Eurex to trade the DAX - Your 'ping' is around 250-350 - while not slow - the traders in Europe have a slight edge in data-speed.

How important is this for the scalping trader - is it a huge disadvantage?

Your thoughts...

Thanks.
More...

If what you are doing is:

a) observe the market-data and quickly react to its changes by hitting bids and lifting offers

b) doing the a) w/ the computer and the decision logic runs on the computer in Australia

you will be disadvantaged to the users who reside in Europe. You are at a disadvantage both ways: you get the market-data later, the orders you issue will get to the markets later.

The ping-time is not a bad proxy to use to asses the size of the disadvantage.
 
FWIW, when my ping times exceed 50ms, I am at a complete disadvantage to other scalpers.

Dont forget, you're competeing with folks who are on fiber.
 
speed is the most important element to scalping. you can still make money if your scalping skills make up for the handicap.

i have a 1-2 second delay on my time and sales tape (due to crappy trading systems) and my NX's miss like 75% of the time so i miss most of my outs and get squeezed if i just got in the position. so yes, having slower connections can severely hurt your trading profits.
 
Hmm - so it looks like for the Australian scalper:

He should mainly be looking at the SFE contracts, perhaps those from Singapore/HK/Japan.
 
Quote from gotmessner:

Hey,

I was wondering what everyone's thoughts are on the speed which you are connected to the exchange.

Say for example you are in Australia and you connect to Eurex to trade the DAX - Your 'ping' is around 250-350 - while not slow - the traders in Europe have a slight edge in data-speed.

How important is this for the scalping trader - is it a huge disadvantage?

Your thoughts...

Thanks.
More...

dont know about eurex, but i would imagine ALL exchanges do what LIFFE does......

all quotes and prints will appear at EXACTLY the same time on all screens WHERE EVER you may be in the world.

im not a techie, so excuse me if my explanation isnt quite clear here....

as you probably know, the Internet consists of POPs or points of presence. these are really local telephone exchanges. the exchange knows how long it takes for a ping to get to each pop, so all data is sent to the pops in terms of how long it takes the data to get to that pop. so the london pop will be sent its data a fraction of a second AFTER the ozzie pop to counter for the delay/latency the data takes to get to the ozzie pop v london pop v ny pop etc.

i know this cos a friend of mine worked for the isp who had the liffe contract and worked on the architecture.

i know this only deals with the outbound quotes & prints, not incoming orders, but i thought it may be useful to know that the exchanges (esp liffe) do go to a lot of trouble to assure level playing fields.

maybe they allow a fraction of a second for all orders to come in, then process each batch as if they all have the same relative time stamp (kind of reverse to the outbound stuff) if you follow.

hth.
 
Quote from FredBloggs:

dont know about eurex, but i would imagine ALL exchanges do what LIFFE does......

all quotes and prints will appear at EXACTLY the same time on all screens WHERE EVER you may be in the world.

im not a techie, so excuse me if my explanation isnt quite clear here....

as you probably know, the Internet consists of POPs or points of presence. these are really local telephone exchanges. the exchange knows how long it takes for a ping to get to each pop, so all data is sent to the pops in terms of how long it takes the data to get to that pop. so the london pop will be sent its data a fraction of a second AFTER the ozzie pop to counter for the delay/latency the data takes to get to the ozzie pop v london pop v ny pop etc.

i know this cos a friend of mine worked for the isp who had the liffe contract and worked on the architecture.

i know this only deals with the outbound quotes & prints, not incoming orders, but i thought it may be useful to know that the exchanges (esp liffe) do go to a lot of trouble to assure level playing fields.

maybe they allow a fraction of a second for all orders to come in, then process each batch as if they all have the same relative time stamp (kind of reverse to the outbound stuff) if you follow.

hth.
More...


Hmm I'll do some research on that. That sounds great if thats how it's done.

Thanks!
 
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