“A delay of just 5 milliseconds could cost your firm as much as 4 million USD”

Technology continues to change the face of trading but how many take the time to stop and take stock of its true impact?

Recent reports suggest few, but more and more traders are looking to learn more about the technology in a bid to get the best out of their daily trading activities.

The line between success and failure remains thin and in such changing times technology remains a key component of trading. But what do traders really need to know?

Should they really know exactly how a server is configured and work? Largely no but they should know about what areas have the biggest impact and be able to work closely with their technicians to deliver the best possible results.

In this instance the number of variables remains high due to the custom nature of the technology. Each company or individual has its own setup and in turn it becomes about optimizing it.

How can a trader ensure they get the best connection and be able to transact at just the right moment? Of course not all technicians are onsite with many companies outsourcing their server requirements. So it becomes about focusing on the right areas and asking the right questions.

Your Connections and Speed

Most people would automatically assume that hardware would be the first place to look. While they are not wrong there are other areas that can have a bigger impact upon your trading performance.

Speed is everything in trading, especially when you consider that around 4 trillion dollars is traded each day.

Most forms of trading rely on an internet connection. An internet connection can be the difference between a good deal and a bad one because of the lag.

Do you have the best possible connection? Do you have backup or support lines in case of a failure? These and the ability to make use of the latest server technology are very important.

Location Matters

This might surprise a few but the geographical location of your server is also very important. Ideally you want to be located close to your broker’s server. Traders should also think about the country in which their servers are located.

Some locations are more politically and environmentally stable. Switzerland would be a prime example of this and you only have to read the news to see just how costly a mistake here can be.

Resources and Uptime

Uptime rates are critical. There are no two ways about it. Without your servers, you can’t trade but like many things in life they require on-going maintenance. This means careful planning is needed and a full emergency recovery plan should be in place.

The other key component is resource management. Servers can be setup to perform a wide range of tasks and companies often use them extensively.

However it can be very costly to have your server clogged up by non-essential resources. This is because it will slow down processing times and affect your bottom price.

These are some of the core things traders should look at but the key thing is communication and understanding. There are many online resources about trading technology and traders would be wise to read these.

The difference between success and failure can be from these points alone and time should be taken to get to know your system. In all it is one of many aspects of trading that traders have to get to grips with but as competition remains high it is a valuable investment.

Author Bio: Written by Mateo Meier, Technical Director of Artmotion Ltd. Artmotion offers bespoke server solutions (including specialist trading servers) to international clients and is located in Switzerland.