Friday, 31 October 2014

Low latency trading - an interesting reaction.

I occasionally comment on a LinkedIn forum which has automated wholesale financial trading as its primary focus. My background comes from this arena of developing and supporting real-time trading systems and market data distribution systems.

One discussion topic raised was whether low latency trading has a long term future. Essentially this technique works by recognising market conditions, such as arbitrage opportunities, and creating almost instantaneous trades before your competition spots the opportunity. If the principal sums involved are sufficiently large it is possible to make a healthy profit.

I added a comment to the effect: "Low latency is irrelevant in investment, but important in trading." I'm firmly of the opinion that true investment needs careful research and consideration before any investment decisions are made. Trading can be very different, often just speculation.

I noticed that shortly after posting that comment my LinkedIn profile had been visited by forum moderator. I wonder if I touched a nerve somewhere in the Trading community?!

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