21 June 2021
Speed is of the essence when it comes to effective trade execution. Contemporary markets are faster and more competitive than ever. In such an environment, if a trader wishes to achieve their goals for any particular trade, then low latency is vital.
Low latency is when an order for a trade is placed and then executed in a period of time that is deemed short by current industry and market standards. In the past, low latency was largely a function of the client/broker relationship. Now, with digital trading, low latency is an expectation.
Despite the advantages brought about by digital trading, there are still so-called ‘trade-related latency’ issues to consider. These are factors that impact the speed with which any trade is executed. Time ultimately impacts on profitability.
Here we’ll look at what three of these factors are and how they can be avoided.
In a digital environment, speedy trade execution is dependent on your hardware being up to the required standard. In other words, it needs to be reliable. It not only needs to have the required capacity, it also has to be fast and dependable. Without any of these three components, you’re likely to face difficulties.
A desktop computer with good capabilities is by far the best option. It primarily needs to be reliable and should have at least 500GB of hard drive memory and at least 8GB of RAM. In terms of processor size, a quad-core, 2.8GHz CPU is a good place to start.
It’s worth remembering that the more programmes the computer has to run, the slower and less efficient it will be. Strip back to only essential programmes on the computer you intend to use for trade execution.
A reliable power supply is essential. Multiple screens are not an absolute necessity but can make life easier. Anything which makes you as a trader more efficient and focused is of benefit.
Having decent hardware in place is no use if you can’t secure adequate market access. Connectivity problems are one of the primary causes of latency issues when it comes to trade execution in a digital age.
Data lag and bottlenecks can slow down the connection between the client and their broker. Problems with the software, be that local to the broker or the exchange, can reduce speeds further.
A reliable internet connection is a must, and the speed of this can be checked with regular ‘ping tests’ to broker and exchange servers. It’s also important to ensure that your software is working correctly and is free of viruses which can slow down overall performance.
Even in this digital age, the human factor cannot be discounted. A good broker is your best protection against latency issues in trading order execution. They will have a robust and up-to-date technological infrastructure, know how to deal with any issues that might arise, and have direct-market access (DMA) to the exchange.
Trade execution needs to be as efficient as possible, and a competent brokerage will have tested and refined their processes over time to ensure that low latency is consistently achieved.
At GIS HK, we offer efficient and dependable execution-only trade execution services, wherever our clients are in the world. Our innovative, technology-led and experienced approach helps to make the process easier, making Asia-Pacific trading activities much more nimble and responsive.Call +85230183009 or email firstname.lastname@example.org to find out more. Back to News