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Trading before the trader

I chaired TradeTech Architecture  last week, and the conversation was all about HFT and low latency.

For those not in the know, that’s High Frequency Trading, using a technology called low latency that enables ultra-high speed trading in real-time.

What’s ultra-high speed?

Well, I asked one panellist how fast you could process a trade around the world.

I’ve asked this before and technically it would be about 400 milliseconds or less.

If you’re wondering how fast that is, here’s a chart of speeds:

  • 1.0 = a second [ s ]
  • 0.01 [ hundredth ] = a centisecond [ cs ]
  • 0.001 [ thousandth ] = a millisecond [ ms ]
  • 0.000 001 [ millionth ] = a microsecond [ µs ]
  • 0.000 000 001 [ billionth ] = a nanosecond [ ns ]
  • 0.000 000 000 001 [ trillionth ] = a picosecond [ ps ]
  • 0.000 000 000 000 001 = a femtosecond [ fs ]
  • 0.000 000 000 000 000 001 = a attosecond [ as ]
  • 0.000 000 000 000 000 000 001 = a zeptosecond [ zs ]
  • 0.000 000 000 000 000 000 000 001 = a yoctosecond [ ys ]
  • In fact, we had a lot of discussion during the conference about even faster speeds, with one wag asked if orders could be filled before they are sent based upon neutrinos.

    You may already know about neutrino’s but, if not, it was the big news of a week or so again when scientists working on the  Large Hadron Collider experiment found the atom, called a neutrino, can travel faster than the speed of light.

    It’s a ground breaking piece of news as it means that basic science is turned on its head when something can arrive before it leaves.

    Here’s a good summary of what the scientists found:

    “Neutrinos fired 454 miles from a supercollider outside Geneva to an underground laboratory in Gran Sasso,Italy, took less time (60 nanoseconds less) than light to get there. Or so the physicists think. Or so they measured. Or so they have concluded after checking for every possible artifact and experimental error.  The implications of such a discovery are so mind-boggling, however, that these same scientists immediately requested that other labs around the world try to replicate the experiment. Something must have been wrong to account for a result that, if we know anything about the universe, is impossible.  And that's the problem. It has to be impossible because, if not, everything we know about the universe is wrong.”

    Everything is wrong, because it does mean that time travel is possible as atoms are arriving before they are sent, according to the speed they are travelling which is faster than light?

    Could such technology be applied to trading? was the big question last week.

    There are already predictions that some exchanges can process orders in under a nanosecond.

    That’s fast.

    Can they get much faster and what does it mean?

    This was the big chat of last week, which I’ll cover in more depth in my next blog entry.

    Meantime, here’s my favourite quote of the week:

    A bartender says: "I’m sorry, we don't serve neutrinos here".

    A neutrino walks into a bar.

     

    About Chris M Skinner

    Chris M Skinner

    Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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    • Dan

      I love that joke!
      Another theory that’s come out surrounding the neutrino experiment, that so far seems to work and preserves Einstein’s E=mc², but is still completely mindboggling, is that the neutrinos didn’t travel through what we know as space, but ‘via’ another dimension that we can’t perceive. because the curvature of the earth is not relevant in this dimension, the neutrinos have less distance to cover and thus arrive sooner than light travelling the same apparent distance.
      I’m sure that’s not quite right, but it was in the last New Scientist, so you can always look it up there!

    • Al

      … neutrinos aren’t new, just that someone measured them breaking the speed limit. The Met have been informed 🙂

    • Ivar Petersen

      Doesn’t Einstein’s theory of relativity relate to the (in)ability of any particle *accelerating* to or beyond the speed of light?
      In that case, neither the theory of relativity or the basis for the universe is severely broken if the neutrinos have had their speed since creation

    • Mark Piper

      I needed to check the date of this article after reading it and was surprised to find it was dated 2011 and not 2001.
      Why was I surprised? – clue was lines like “a technology called low latency” and “Could such technology be applied to trading?” Talk about missing the boat….
      With all due respect, this article is simply warmed over pizza….If you want to be appraised of current thinking on what is an exciting technology, I’d encourage you to join the Complex Event Processing Group on Linkedin.

    • Chris Skinner

      So funny Mark
      Bear in mind that some folks aren’t in your space,
      Chris