Speed trading may be heading out to sea | Hacker News Reader

Speed trading may be heading out to sea

cnbc.com

17 pointsanigbrowl21 comments

Errrmmm, sure - the "halfway point" for the data between New York and London is "in the middle of the ocean", but floating above it in a boat isn't going to give you access to the fibers down ion the ocean floor.

I call bullshit.

A fiber laid directly between those points, with a branching unit installed at the midpoint and then a fiber dropped vertically down from a floating platform, would probably be fine. The ocean is really wide but not really very deep (mid atlantic is maybe 5km deep, which is about 0.5% of the distance)

It's crazy for lots of other reasons (the expense of doing something like this, the zero sum nature of it, and the easy solution of just having "tick based" trading where all trades submitted in a given interval are randomly selected from to happen at a certain time), but doesn't seem technically infeasible.

http://www.cfreer.org/papers/PhysRevE_82-056104.pdf

http://www.alexwg.org/

I'm not questioning the credentials of the people proposing it, on the surface it's an obvious solution to (part of) their problem.

Just like "factorising large prime numbers" is the easy (to ask for) solution to other problems.

I think the truth is, unless you've got enough money to run your own trans Atlantic optical fibers, either with your center-tap coming up to your mid-ocean floating datacenter, or with some as-yet-un-invented unmanned deep sea datacenter sitting on the ocean floor in the middle of your private fiber - this is pretty much an "I want a pony!" solution to reducing transaction times.

Radio.

Really? You've either gotta keep the carrier frequency down low enough to let it bend around the earth - which limits the bandwidth you can transmit, accept the vagaries of shortwave radio transmission - which doesn't seem to be what you'd need for HFT applications, or lose the several hundred milliseconds it takes to get to geo-sync orbit and back _twice_ - which would lose out speed wise to anybody on the ground at either end who only needs to get his signal up to orbit and back once.

I don't see how radio helps much?

(perhaps a string of line-of-sight high frequency repeating stations? At a first approximation assuming 100m (330') tall towers you get ~36km to the horizon, so you'd need ~150 towers with repeaters on them to cover the ~5500km from London to New York. I guess that's not _impossible_, but even if you could stack up the infrastructure required, the latency in those ~150 repeaters would need to be very small to beat the guy sending his data through the fibre on the sea floor with a theoretical ~20ms ping time, and a quickly googled practical pingtime of ~100ms. The radio options still requires the ~20ms speed-of-light propagation time, but needs to get the signal through ~150 repeaters as well, compared to just the one on each end of the fibers (I _think_ the optical repeater/amps used on oceanic fibers are zero latency...)

Good points.

AWACS – or analogous commercial aircraft regularly in convenient positions?

Or far fewer towers/tethered-transmission-balloons at much higher altitudes?

Or even unmanned constantly-flying communications platforms – 'SkyStation' was one such blimp-based concept from the 90s.

Wikipedia suggests the actual service distance from an elevated antenna is a bit larger than the simple geometric estimate. Also, I think you've doubled the necessary number of 100m-high relays: if each tower reaches the horizon at N kilometers, they reach another equivalently-elevated tower at 2N kilometers.

Seriously, though, if there was something to this, they could eventually splice some optimally-positioned platforms into transatlantic cables (existing or new). Of course then the 'optimal position' would then be more a function of available cabling than of natural geometry/geography.

Radio and/or satellite from the middle of the ocean to land is much higher latency than all the way across the darn ocean. I too call bullshit.

"With multiple players engaging in high-speed trading - buying and selling stocks at literally 90 percent the speed of light"

This sentence seems meaningless - it's comparing units of time to units of velocity. My best guess is that it means trades are made in 90% of the time it would take for the data to simply travel the distance between the exchange and the server, but that is not at all clear.

Duh, just read a few paragraphs up: "[funds] could soon be relocating ... to defy the laws of physics". It's pretty obvious to anyone with half a brain that if they can defy the laws of physics, selling stocks at 90% of the speed of light is trivial. (Although once you get above 90% you start to run into some limitations.)

This needs to be stopped, seriously. I refuse to believe that HFT really adds anything of value to the world.

I don't see the connection between your first sentence and your second.

I don't believe reality television adds anything of value to the world, but that doesn't mean I think it should be 'stopped' (and what does that even mean?). Can you explain?

Why do you think HFT does not add any value to the world?

How would it? What positive externality is generated by HFT's winning and losing money from each other?

Are you arguing that the market liquidity provided justifies the amount of effort invested? Obviously it does in some purely capitalistic sense, but what is really created by this activity.

So you are arguing extremely intense competition is useless.

From my point of view, market participants make a living by their ability to execute OODA loops. The bot trading wars is a more extreme version of the competitive process.

Yes, extreme competition is useless.

A level of competition is good, because it makes people do their best. But as soon as it becomes too cut-throat, resources are wasted on auxiliary things beyond just being the best and most cost-effective.

These electronic trading boats would be an excellent example of "market failure" in this regard.

Instead of actual trading boats to trade their food and stuff, we'll now sit in the middle of the ocean to correlate some arbitrary signals... Like excessive speculation in commodities, it doesn't add value.

Don't tell me "it adds liquidity" because I already know that. One could argue we have massively enough liquidity already in the things that would actually be arbitraged here.

The financial sector overall is much too big: http://www.voxeu.org/index.php?q=node/6328

"These electronic trading boats"

Wait... is this a joke?

waaaaaait a second. Can you show me how HFT adds value? Because as far as I can tell, it's just a faster middle man playing a zero sum financial game.

HFT provides liquidity to the market.

Nobody needs THAT much liquidity. The difference between trading in 1 millisecond and 1 second is negligible for all practical purposes.

No, the difference between 1 millisecond (and the latency of the good exchanges is smaller than that) means that the faster guy gets the trade, and you don't. You don't provide the liquidity, you don't get the trade.

Or, worse, you get half of a two-part trade that you were going to do, and you are stuck holding something or owing something.

Reply on news.ycombinator.com