Arpad75
Recruit
- Messages
- 7
Hello Everybody,
I don’t have extensive experience about news trading, but even if I would have, I would ask these same questions.
If anyone has anything to say, please don’t hesitate to tell it.
Thanks.
I have the following concerns regarding the execution during high impact news releases.
1) Broker’s server (matching engine) location vs. LPs’ server location
There are two popular and reasonable places for brokers to place their servers: London and New York.
But even if the broker co-locates his server in Equinix NY4 or LD4, there might be some of their LPs who have their server in the other metropolis.
And even if I get a VPS at the same location where my broker’s server is, and would run my trading algorithm from there, there could be situations for excessive delays in the matching process according to the following:
Let’s say the broker’s server and my VPS are in LD4. My order gets to the broker server instantaneously – for me as a retail trader, 2 ms would be instantaneous.
Then my broker sends my order to LP1, but maybe there is a fast moving market, the price does no longer exists at LP1, so LP1 rejects. This is ‘last look’.
If this liquidity provider is in New York, then my order will get at least 70 ms delay, since this is the round-turn time it takes for the message to travel through the Atlantic there and back. And we even didn’t take into account the last look delay during which some LPs dare to hold the trade for 100-200 milliseconds or even more, before they finally reject it.
If the order is then rejected by another LP, and then maybe several other LPs (before it is finally matched), then this could happen: 35 ms LD-NY, rejection 35 ms NY-LD, new order 35 ms LD-NY, rejection 35 ms NY-LD, new order 35 ms… etc.
Essentially, each rejection by an LP means at least 70 ms additional time.
If there are several consecutive rejections from LPs in a fast moving market (e.g. news release), then the total time could be above 1000 ms for the execution.
It would be detrimental if the message would have to travel through the Atlantic several times before filling.
Anyway, I intend to use the cTrader platform from Spotware, which is an independent technology provider for retail brokers. I don’t yet have the technical knowledge or monetary resources to deal directly with FIX-API or any proprietary sophisticated software. This is the reason why I have to use cTrader as my trading platform. Spotware has its trading servers in LD5, but the liquidity is up to the broker’s choice, so if the broker has LPs in NY then my concern is grounded.
And even worse; what if the broker uses Integral (or other U.S. liquidity aggregator) for cTrader? Then ALL of the orders have to travel through the Atlantic, even if the LP is also in London?
2) With liquidity aggregator vs. without liquidity aggregator
Does a liquidity aggregator add an additional layer of latency to the total matching time in every case?
So if a broker has its server at the same place where his liquidity aggregator, is this setup slower for sure compared to if the broker would have direct LP connections without the service of an aggregator?
So using a liquidity aggregator is good for execution time, bad, or neutral?
Would I be better off choosing a broker that employs a liquidity aggregator; or it would be a better idea to find a broker that implements direct connections to its LPs, i.e. applies a proprietary bridging solution?
3) Futures vs. OTC forex
Would it be better for me to trade high impact news releases on CME/Globex, i.e. currency futures?
Is there enough liquidity there (during high impact news releases) or even more liquidity compared to retail forex venues or even HotSpotFX/Currenex?
Many thanks,
Arpad
I don’t have extensive experience about news trading, but even if I would have, I would ask these same questions.
If anyone has anything to say, please don’t hesitate to tell it.
Thanks.
I have the following concerns regarding the execution during high impact news releases.
1) Broker’s server (matching engine) location vs. LPs’ server location
There are two popular and reasonable places for brokers to place their servers: London and New York.
But even if the broker co-locates his server in Equinix NY4 or LD4, there might be some of their LPs who have their server in the other metropolis.
And even if I get a VPS at the same location where my broker’s server is, and would run my trading algorithm from there, there could be situations for excessive delays in the matching process according to the following:
Let’s say the broker’s server and my VPS are in LD4. My order gets to the broker server instantaneously – for me as a retail trader, 2 ms would be instantaneous.
Then my broker sends my order to LP1, but maybe there is a fast moving market, the price does no longer exists at LP1, so LP1 rejects. This is ‘last look’.
If this liquidity provider is in New York, then my order will get at least 70 ms delay, since this is the round-turn time it takes for the message to travel through the Atlantic there and back. And we even didn’t take into account the last look delay during which some LPs dare to hold the trade for 100-200 milliseconds or even more, before they finally reject it.
If the order is then rejected by another LP, and then maybe several other LPs (before it is finally matched), then this could happen: 35 ms LD-NY, rejection 35 ms NY-LD, new order 35 ms LD-NY, rejection 35 ms NY-LD, new order 35 ms… etc.
Essentially, each rejection by an LP means at least 70 ms additional time.
If there are several consecutive rejections from LPs in a fast moving market (e.g. news release), then the total time could be above 1000 ms for the execution.
It would be detrimental if the message would have to travel through the Atlantic several times before filling.
Anyway, I intend to use the cTrader platform from Spotware, which is an independent technology provider for retail brokers. I don’t yet have the technical knowledge or monetary resources to deal directly with FIX-API or any proprietary sophisticated software. This is the reason why I have to use cTrader as my trading platform. Spotware has its trading servers in LD5, but the liquidity is up to the broker’s choice, so if the broker has LPs in NY then my concern is grounded.
And even worse; what if the broker uses Integral (or other U.S. liquidity aggregator) for cTrader? Then ALL of the orders have to travel through the Atlantic, even if the LP is also in London?
2) With liquidity aggregator vs. without liquidity aggregator
Does a liquidity aggregator add an additional layer of latency to the total matching time in every case?
So if a broker has its server at the same place where his liquidity aggregator, is this setup slower for sure compared to if the broker would have direct LP connections without the service of an aggregator?
So using a liquidity aggregator is good for execution time, bad, or neutral?
Would I be better off choosing a broker that employs a liquidity aggregator; or it would be a better idea to find a broker that implements direct connections to its LPs, i.e. applies a proprietary bridging solution?
3) Futures vs. OTC forex
Would it be better for me to trade high impact news releases on CME/Globex, i.e. currency futures?
Is there enough liquidity there (during high impact news releases) or even more liquidity compared to retail forex venues or even HotSpotFX/Currenex?
Many thanks,
Arpad