- Joined Aug 27, 2009
https://sniperinmahwah.wordpress.com/2018/05/07/shortwave-trading-part-i-the-west-chicago-tower-mystery/To minimize latency, high-frequency traders tend to locate as close of physically possible to the exchanges, as less distance to cover means less time to send and receive messages that have a speed limit determined by the laws of physics. That’s not a hard rule, of course; some traders need rapid access to transatlantic data too, and are apparently turning to HF band radio links to gain the edge over other traders.
But what in the world does the weather have to do with all this? How can a hot, humid day possibly negatively impact the world of high-frequency trading? 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.