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Technology Stocks : The *NEW* Frank Coluccio Technology Forum

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To: spiral3 who wrote (30737)7/26/2009 7:52:34 PM
From: Frank A. Coluccio  Read Replies (1) of 46821
 
Latency Arbitrage

[Opinion] The Un(?)fair Advantage of Latency Arbitrage


Ralph Frankel, Solace Systems | Securities Industry News | Jul 24 09

For years, Major League Baseball has been trying to stamp out illegal substances that simply make players stronger. Think about how much of an advantage a batter would have if he knew exactly where every pitch was going to cross the plate before it left the pitcher’s hand.

Technologically advanced traders are giving themselves an advantage that some people feel is just that unfair. Using techniques and technologies I’ll describe below, they squeeze every last microsecond of latency out of their market data feeds and trading systems to give themselves a sneak peak of market prices that’s measured in milliseconds. Thanks to powerful algorithms and high-speed order executions systems that’s enough time for them to engage in “latency arbitrage” – the buying and selling of equities based on small price changes that have not yet been broadly recognized due to the varying speeds of market data delivery systems.

Cont.: securitiesindustry.com [ 2-pages ]

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