High Frequency Trading Enable Traders to Forecast Stock Trends

Financial services companies should opt for high-frequency trading servers in order to gain a competitive edge in the electronic trading industry. In the world of finance, speed and efficiency go hand in hand. In commercial banking and electronic trading, the turnout time o transaction is the main enemy to slow down the process.

It is no wonder that in the trading market, time works in nanoseconds. And those who are in electronic and commercial trading better know how time flies. The high-frequency trading server may act as a game-changer for finance companies.

What is High-frequency Trading Server?

High-frequency Trading Server is a type of algorithmic financial trading. It uses high-frequency financial data and electronic trading instruments that help in trading at a higher speed. It helps trading companies to have greater turnover rates thus there are higher order-to-trade ratios.

High-frequency trading (HFT) is one of the very common forms of algorithmic trading in the finance sector. Since it uses an advanced technical method and better algorithm, it proved to be rapid trading of shares. HFT uses exclusive trading techniques that assist computers to perform enter and exit positions in fractions of a second.

What do you need to have a High-frequency Trading Server?

If you are from the field of finance and planning to adopt High-frequency Trading Server. You must know the basic requirements for it. There should be a good infrastructure that has a high-speed computer with costly and upgraded hardware.

The second is “co-location” which is a high-cost facility that places trading computers in close proximity to the exchange servers. It saves time for exchanging data. The third requirement is Real-time data feeds and last but not least, the heart of the HFT that is computer algorithms.

High-frequency Trading Server types on the basis of processors used?

The type of processor used in the High-frequency Trading Server becoming a decisive factor regarding the performance. In order to analyze the minute price changes and executing trade orders, computers use the algorithm.  As we know the faster we are able to run trading algorithms, the higher the chance to win over the competition.

X-86-based

x86 is the common name given to Intel processors.  It is called so because this version of the processor is released after the original 8086 processor. For high-computing applications such as AI and data analytics workloads, x86 processors are well suited. That is those High-frequency Trading Server that is X-86-based carry out computing executions at a faster rate.

The performance of HFT-optimized servers with x86 dual processors can be boosted by the Supermicro platform. The board-level control, circuitry enhancements, and custom-tailored cooling systems of this server helps in achieving the highest sustained performance. 

ARM-based

An ARM processor is developed by Advanced RISC Machines (ARM).it is one of a family of CPUs that are based on the reduced instruction set computer (RISC) architecture. The design of ARM processors is very simple.

It supports more efficient multi-core processing and developers also find it easy in coding. ARM-based high-frequency Trading Server increased the speed and minimize latency. As we know the faster we are able to run trading algorithms for analyzing price changes, there will greater the probability to win over the competition.

What are the applications of a High-frequency Trading Server?

In recent years, with the adoption of electronic platforms and high-frequency traders (HFTs) servers, the nature of trading has been changed. These advanced servers find applications in equity markets, Forex markets, commodity markets, and many others. By adopting this type of server they have experienced an inflow of algorithmic traders and a decline in open outcry trading. 

Equity markets:

An equity trader is involved in the buying and selling of a share of the company in the equity market. So it is needed for them to have quick and accurate data about the rise and drop in the company’s share.

Forex market:

Forex, you can better know it as foreign exchange. The forex market is composed of currencies from all across the globe. The players of the forex market need to have precise predictions about the price movements. High-frequency Trading Server helps them to better understand the time and the way the price of a particular currency is hiking.

Commodity Markets:

It is a common marketplace for buying, selling, and trading raw materials. High-frequency trade has driven the buying and selling of commodities. The influx of more high-speed computer-based traders with advanced techniques has brought cut-throat competition to this market.

What are the benefits and limitations of a High-frequency Trading Server?

Benefits

• High-frequency Trading Server is very beneficial not only for traders but for the overall market.
• It creates high liquidity for the traders.
• It saves time and creates more opportunities in the finance sector.
• HFT assists the traders in price discovery.
• It also helps in the price formation process.
• High-frequency Trading Server ensures high-speed transactions.

Limitations

• The higher cost of a High-frequency Trading Server is the biggest hindrance to its adoption.
• Algorithm development is also very expensive.
• Building infrastructure that requires more upgraded versions.
• In some HFT servers, subscription charges may be required for the data feed.

The bottom line

The High-frequency Trading Server Market has been witnessing rapid growth due to the increasing adoption of algorithmic trading in the financial market across the globe. High-frequency Trading Server is a type of algorithmic financial trading. These servers find applications mainly in equity markets, Forex markets, and commodity markets.

There are many advantages of HFT server and it has changed the nature of trading in past few years. Although the high cost of such servers slowed down the rate of its implementation.