Forefront Communications

Traders: ​Great Data – The Antidote to Speed and Volatility Stress


Mark Dowd

Mark Dowd

Automated traders are in an elite club. Every day, they walk a high-stakes tightrope between the potential for big gains and big losses. Whether you’re a market maker, volatility trader, or systematic trader, every day is like a poker tournament held at microsecond speeds.

That’s why speed commands so much attention in the machine trading world. Speed is sexy, speed sizzles. In shops that have more of it, their machine-driven trading can move them into or out of positions faster than their competitors. That helps win more often than not, and equally important, helps them avoid getting picked off.

There’s no question about it. Speed is exhilarating. But it’s also stressful.

When you’re moving at microsecond speeds, very good and very bad things can happen in a flash. Therein lies the stress. You and your machines need to be always consuming data, sifting it for opportunities, and moving on them fast – and your moves need to be right most of the time.

It’s that last part that can often get tricky. With machine traders focusing so much on speed, they seem less focused on the quality of the data they’re feeding into their models – the ones and zeroes that ultimately drive trading decisions. That’s dangerous because bad data received at the speed of light is still bad data.

Read the full article here.

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