Heat and Humidity Slow Down High-Frequency Trading Due To Microwave Links (hackaday.com) 117
szczys writes: Even tiny slowdowns have major ramifications on automated stock trading. To put the computing power as close to the markets as possible, microwave links (point-to-point links via dedicated microwave dishes) connect Wall Street to server installations in New Jersey. Hot weather, especially when accompanied by high humidity, slows those links down enough to make an impact on trading. From a report via Hackaday: "For short-haul links around the financial centers in New York, though, dedicated network links are favored for low-latency connections. Rather than trusting their trades to the vagaries of the internet and risk an unfavorable routing path or a cable severed by an errant backhoe, high-frequency trading firms often rely on microwave links to exchange information. [...] As it turns out, those microwave connections are the weak link in the system. During the early July heatwave, the links were experiencing slight delays in transmission times over that 16-mile path and throwing off the timing of the trading algorithms. The delay was minuscule -- on the order of 10 microseconds -- but in a business where millions are made and lost in seconds, that's substantial." Last month, Bloomberg reported that high humidity was impeding radio transmissions among three New Jersey data centers where U.S. stocks trade. According to a note Nasdaq sent customers, it took about 8 microseconds longer to send info from the stock exchange's facility in Carteret to the New York Stock Exchange data center in Mahwah, and an extra 2 microseconds to send data to Cboe Global Markets' exchange in Secaucus.
Global Warming (Score:1)
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My 401(k) contributions are supposed to purchase new shares every Wednesday. I've noticed that sometimes it's Thursday, or Friday, sometimes they even miss a week and it's delayed into the next week. Wouldn't surprise me a bit to learn that the money is being held and used for other things in the meantime. Or that they sell me shares when the price is best for them.
It wouldn't surprise me if a well aimed email would answer your query.
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What next, reading fine print?! Where does the slippery slope to knowledge end?!
Re: boo, fucking hoo (Score:1)
Really? I'm gonna bet that would be a complete waste of life. If you get a response at all it's going to be a mix of dissembling and "fuck you, prole, you have no rights" boilerplate.
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Really? I'm gonna bet that would be a complete waste of life. If you get a response at all it's going to be a mix of dissembling and "fuck you, prole, you have no rights" boilerplate.
I learned a long time ago that the most powerful word in the world is why.
It's particularly useful when used as a question and asked repeatedly without accepting bullshit answers like "we've always done it this way." Tends to highlight stupid excuses people have for not wanting to change or expend any effort into troubleshooting.
And quite honestly, a company 401(k) contribution policy should not be a hard document for a company to produce in order to help explain the GP's issues. That should take essenti
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My 401(k) contributions are supposed to purchase new shares every Wednesday. I've noticed that sometimes it's Thursday, or Friday, sometimes they even miss a week and it's delayed into the next week. Wouldn't surprise me a bit to learn that the money is being held and used for other things in the meantime. Or that they sell me shares when the price is best for them.
The financial industry is heavily regulated. 401(k) trustees and mutual funds (which most 401(k) plans consist of) are no exception. Mutual funds do (and must) hold money for lots of "things", such as paying expenses and honouring reimbursement requests. Remember that a mutual fund is not like a stock. It is priced once a day after the market closes, and then transactions are processed at this price. We can be (perhaps rightly) cynical about a day or two slippage here or there, as your contributions make th
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When I sell shares in my Fidelity account, the brokerage holds my money for 3-5 days.
Trades take 3 days to settle. (They used to take 5.) That's true for anybody, not just you. A broker may not give you your money until then because, to put it simply, they may not have it. They're waiting for the guy who bought your shares to pay them. (And maybe so is his broker.) The buyer has -- you guessed it -- three days to put the money in his account with his broker.
Your broker might also be waiting for you to deposit the shares in your account. You can sell shares without them being there yet (but
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Don't hold your breath. Those advising you to do so have scurrilous motives.
But is HFT a good thing? (Score:5, Interesting)
I doubt it.
Maybe if fewer quants tried to hedge things to change a method for investing capital into a method for legalized gambling, the world would be a better place.
(caveat - some of my cousins work for such firms)
Not a good thing. (Score:2, Informative)
I doubt it.
Maybe if fewer quants tried to hedge things to change a method for investing capital into a method for legalized gambling, the world would be a better place.
(caveat - some of my cousins work for such firms)
Of course not. By it's nature it's an activity that produces nothing (it's not like a company's going to shut down if someone doesn't buy its stock for that particular tenth of a second), punishes investors (it raises the price for the person who wants to invest in the company but can't afford the millions in infrastructure cost to get a give few seconds advantage), increases the divide between the rich and the poor (see #2), and is a drain on human society.
From a geeky perspective it's a fun idea, though.
Re: Not a good thing. (Score:1)
Gotta get that transaction time down and that transaction rate up, if we want the financial markets to become properly sentient.
Re:But is HFT a good thing? (Score:4, Insightful)
It isn't. We need to shut these parasites down.
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Don't worry, I'm sure your stocks are safe.
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I agree. HFT is so unfair and I was surprised that none of the trading platforms have taken steps to ban the practice and return to one-second resolution.
I guess that the trading platforms are only allowing subsecond HFT because they offer their customers to co-locate in hyper-local data rooms very close by main trading platform, also owned by the trading platform, at massively high prices.
Obvious cash-grab is obvious. I wonder what kind of regulations will come about in the future to deal with this.
Re: But is HFT a good thing? (Score:1)
"I wonder what kind of regulations will come about in the future to deal with this."
Perhaps the Demopublicans will make it illegal to criticize HFT? After all, only a racist child-molesting terrorist climate-change-denier would ever want to criticize our masters on Wall Street.
Re: But is HFT a good thing? (Score:2)
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I doubt it.
Why doubt when you can research? The implications of HFT have been quite actively analysed for many years now.
Finally! (Score:5, Funny)
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Wrong.
I mean in all seriousness I have no idea, but while it is true that NYC is more dem than repub, I think the Hamptons are not, and a lot of hedge fund managers (approximate for frequency traders) seem to be repub and chums with Trump and/or Koch, Mercer...
So unless one of us has "hard facts"on the matter I guess we cannot say if most frequency traders are dems or repubs. Maybe they are "independent" and they don't care one way or the other? Seeing as their work is so "useful" to society, that would fit
Should not be allowed anyway (Score:1)
I would not shed a tear if someone jammed the link and sunk the company.
...the (hot) flash boys... (Score:3)
Thoughts and prayers (Score:5, Insightful)
The delay was minuscule -- on the order of 10 microseconds -- but in a business where millions are made and lost in seconds, that's substantial."
My sympathies to all the high-frequency traders who have to wait an extra 10 mu to rip the rest of us off...
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And that’s a problem because?
Well in the old days, the market maker would have bridged the gap. (not for this situation, but for a sell at best price) the buyer would have paid something like $1.75 you would have gotten $1.25 and the market maker who was actually taking a risk would have made $0.50 (numbers just for illustration not meant to be accurate)
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I want to sell stock. You want to buy stock. I set a sell price of, say, $1, while you set a buy price of $2. HFT sees both of us before we see each other, buys my stock for $1, sells it to you for $2, and pockets the difference.
That's not how it works. As soon as a matching order appears for one that's already in the order book, a trade is made between the two parties at the price of the first order, without any possibility for a 3rd trader to get between them.
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I missed something. How do high frequency traders rip off the rest of people?
They don't. They provide liquidity and depth to the markets. Those are good things -- they keeps bid-ask spreads small, and provide lots of inventory for both buyers and sellers.
Of course, all of that high-frequency speculation occasionally can result in some rapid swings in the price of stock, but that's not the only reason stocks fluctuate. And HF traders are not ripping off those of us in longer-term positions. If anyone, HF traders are trying to rip off (i.e., outgame) other HF traders.
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But what exactly is the source of their profits? Is new money magically being made? Nope, every penny gained by HFT is a penny lost to some trader.
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But what exactly is the source of their profits? Is new money magically being made? Nope, every penny gained by HFT is a penny lost to another HF trader.
FTFY.
In the very short term, I'll grant you that HFT is a zero-sum game. But the only players are HFTs. The rest of us, who wait on the market for longer periods of time, take profits or losses depending on larger-scale factors such as trend, sentiment, company fundamentals, and the economy. That would be true whether HFTs existed or not.
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You expect me to believe that big financial companies are throwing billions of dollars at a zero sum game with no expectation of profit?
No, they are constantly analyzing incoming orders, seeing them before anyone else does, identifying patterns, and moving the price in such a way that ordinary investors end up paying more or selling for less. That's the source of their income, in fact it's the only source, and it's giving them massive profits or they wouldn't be doing it (investing heavily in technology, pa
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Yeah, this kind of makes me want to trade my Tesla in for a Hummer.
Drone and a sheet of aluminum foil (Score:1)
Any kiddos in NJ have a drone and a sheet of aluminum foil?
Ha Ha! (Score:3)
/Nelson
societal good? (Score:5, Interesting)
I find it hard to understand how microsecond quantitative trading that screws all of society by skimming ~ a penny off of every 100 shares, is providing any extra liquidity that benefits the market (which is their claim to why this is a valid thing to do). We're all being played by these quantitative traders, for the pure benefit of billionaires.
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Where did you get that idea?
HFT trades on extremely short-term trends. Like any stock trading, they add demand when they buy and supply when they sell. Lots of speculators means better liquidity and tighter spreads for you. 'Course, they can only do HFT in markets that are very liquid to begin with, but still... Where do you see the harm, exactly?
It is true tha
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HFT systems play along sociological fault lines. Markets, like the concept of "money", are purely a sociological construct. We've seen what happens when systems running faster than human perception inject their presence into what is supposed to be a purely human endeavor: flash-crashes, flash-bubbles and other distortions that make the concept of "price discovery" a joke.
Just because you have the computer muscle and the 0.997c fiber connections to the exchange "book" to insert yourself into the floor action
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Idaknow about the NYSE, but at the TSX in Toronto, I, as an individual trader, could get access to the Book for less than $200/month - less for less info. This may not include getting every tick in real time. But this is a side issue.
How do you figure that HFT outfits "rake in a percentage"? A percentage of what? They have no effect on your trades, other than perhaps getting you a slightly better price by narrowing the spreads.
Re: societal good? (Score:1)
So you believe money is magically conjured from nowhere by HFT traders? You say it results in better prices for others, yet HFT is turning a profit which can only come from other traders. That by definition means prices are not better, it's a zero sum game. Retail traders don't care about the fractional increased liquidity, only other HFT traders would benefit.
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HFT does not '"insert" itself. It relies on things like arbitrage (where two exchanges may have differing prices on something and using that), as well as doing trades like everyone else. It uses computing muscle to scan headlines and articles of the millions of financial advisors out there, as well as corpora
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Where did you get that idea?
The movie Office Space.
I wish I was kidding, but this is slashdot.
It's an EMERGENCY! (Score:2, Funny)
Somebody call the Whaaaaaaambulance!
Oh No! (Score:5, Funny)
This is terrible, because we all know that high-frequency trading is totally necessary for mankind to thrive.
What about rain? (Score:3)
If summer humidity is having an effect, what happens on a rainy day when humidity is 100%?
Also, does this mean someone could disrupt these transmissions with something like a drone...?
Time to think (Score:2)
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No, not 10ms, 10us, one-thousandth of what you said.
I recommend spending more time considering units, and other facts.
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Sorry for messing with the unit, but does that makes any difference?
10us, 1s or even a day is way too short to fit any socially useful mission of trading, such as bringing capital to actors that miss it to develop their activities, or let insurers cover their risks.
Friendly competition (Score:3, Interesting)
It's interesting that one motivation for using microwave communications is to avoid the risk of disruptions like inadvertent cable cuts. However, cables buried in the ground are probably more resilient to attacks than 16-mile communications over open air. If humidity spikes can impact communications, how about steam chimneys, kites, and balloons along the path placed by competitors, not to mention intermittent random jamming.
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The speed of light in fiber optics is much slower than the speed of light in a vacuum, or air for that matter.
299,792 km/s is the speed of light in air
Depending on the refractive index of the optical fiber, you're looking at around 30% slower than the speed of light in a vacuum.
The formula for determining the speed of light in the fiber is going is: c / refractive index.
With that said, you're going to have a speed of light in the fiber around 200000 km/s assuming an average 1.5 refractive index.
If you'd rat
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If competitors do it, they can just sue them and get their lost profits restored. It isn't like they're short on lawyers. That said, the fastest they would be using is Q-band which is 6-9mm wavelength, and wouldn't even see most kites or balloons. With enough balloons you'd slow it down, but you'd also be blocking most of the city skyline and somebody might notice.
You'd need special materials, and now it's getting harder to maintain deniability.
A steam chimney isn't likely to be installed in the middle of t
16 microseconds BS. Ethernet latency higher. (Score:1)
Follow the money, and if you can't follow that, follow the excuses to those who claim to have lost the money.
Yes, in high winds microwave transceivers do have loss of signal (LoS) and other issues. In high humidity and temperature there are other factors. All that is true.
However, a 16 microsecond latency is UNDETECTABLE and IRRELEVANT. To put it in perspective, the latency of a 1500 octet Ethernet frame over a 1Gbps LAN including processing by the transmitter and receiver running a Real-Tiime OS (which
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running a Real-Tiime OS (which none of these Windows-using traders run)
Windows is only the HMI. The lower level network stacks and trading apps are running on highly customized and stripped down networking stacks. Linux was hot some years ago. But I imagine that some trading systems have gone to FPGAs/ASICs. So a 16 microsecond latency represents thousands of instructions on some of the more mainstream architectures. More on the really high performance stuff.
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I think you're confusing microseconds and milliseconds.
Milliseconds (typically abbreviated ms) is noticeable. Miroseconds (typically abbveriated us) is not. 1 ms = 1000us.
Put another way 16us=0.0016ms. That's like an eighth of a millisecond. 1/8ms. Not noticeable.
It doesn't matter how fast the FPGA, CPU, ASICs (listed in increasing order of performance) can process data if the underlying network hardware is 1000 times slower.
E
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Put another way 16us=0.0016ms
Good thing we all went metric because dividing by 1000 is easy.
16 microseconds is 0.016 milliseconds.
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That's like an eighth of a millisecond. 1/8ms. Not noticeable.
To you or me, no. But to specialized HFT trading systems with optimized hardware and networking stacks, that is ages. Particularly if you are trying to beat some other HFT system to a trade.
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Anecdote: Somebody told me they were building the packets on the fly before they knew they even wanted them sent, and if a decision was made that the packet shouldn't be sent then they'd fudge the checksum at the end of the pipeline.
Or to paraphrase somebody who wouldn't add more flash memory to a device because it costed 2 cents more per unit: when you add volume it ads up to millions.
Now something must be done (Score:2)
The climate crisis is nigh. Never mind the fires and drowning polar bears. It's affecting the bottom line of rich people. Put up those windmills and solare panels now!
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just don't ruin their ocean view on their beach properties with those windmills. only the proles are fit to see that
Really Not Surprised (Score:1)
Ferret
Liquid water impedes microwaves. Vapor doesn't (Score:4, Insightful)
Only liquid water impedes microwaves. Vapor doesn't, nor does ice and snow. Even then, liquid water only marginally affects frequencies above 2 GHz. It's a big problem above 11 GHz in the Ku- and Ka-bands as satellite TV and satellite internet users are well aware.
Terrestrial point-to-point microwave is a little above 3 GHz, which has been demonstrated to be unaffected at all by liquid water, and completely unaffected by humidity. The problem is that this article doesn't even bother to mention the frequency used.
Humidity doesn't affect anything. The problem, from my humble perspective, would be processor throttling due to high heat at the receiving site. More so, the BER, or Bit Error Rate, is not even mentioned in the article even though it's the chief factor used to judge how a digital link functions.
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If you trace this "discovery" back to the original person that wrote about it, you'll find this:
https://sniperinmahwah.wordpress.com/2018/05/07/shortwave-trading-part-i-the-west-chicago-tower-mystery/ [wordpress.com]
He discovered both shortwave and microwave radio gear being used to connect these two data centers, one being disguised as a cell tower station.
He took pictures and looked up the specific hardware being used, as well as looked up FCC licenses cross referenced to the address and google maps.
While microwave is up
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> I'm just an amature[sic] (figuratively, given the topic of discussion!)
Even so, humidity, liquid water, and frozen water has no effect at those low frequencies. My point stands.
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Another slashdot scientisticist! Thanks for commenting. Surely your words refute any studies, or measurements. Surely the existence of an effect being below the threshold to be called important in some study is exactly the same as there being no effect at all possible at any level of precision. Thank you so much for your Authoritative bloviations grandpa!
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These guys (some, anyways) are using COTS hardware and well into the higher bands. Stuff like 'airFiber' from Ubiquiti Networks:
https://www.ubnt.com/airfiber/airfiber24-hd/
These operate at 24GHz and are going to be effected.
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Front Running (Score:1)
Colocation (Score:2)
For those that don't know, you can pay to have a server on location at the NYSE site in New Jersey. The exchange goes through great lengths to make sure all clients have the same latency. I believe all of the network connections are equal length.