Soon, several computer scientists argue, stock traders will locate themselves in optimal points long fiber optic cable routes (shown on the map) to optimize the speed of their trades by milliseconds. High-frequency trading is a new way for financial firms to make money by trading securities ultra-fast. Instead of holding securities for the long term, as ordinary investors do, high-frequency traders program computers to buy and sell them rapidly, sometimes several times a second, generating small, steadily accruing profits. Today’s computers and networks are so fast, in fact, that automated algorithms now exploit advantages measured in microseconds. Firms must locate their servers strategically, with the goal of reducing “trade latency” — the delay introduced, inevitably, as electronic signals wend their way through the circuits.
Trading at the Speed of Light – Brainiac.
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