By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
SmartData Collective
  • Analytics
    AnalyticsShow More
    predictive analytics in dropshipping
    Predictive Analytics Helps New Dropshipping Businesses Thrive
    12 Min Read
    data-driven approach in healthcare
    The Importance of Data-Driven Approaches to Improving Healthcare in Rural Areas
    6 Min Read
    analytics for tax compliance
    Analytics Changes the Calculus of Business Tax Compliance
    8 Min Read
    big data analytics in gaming
    The Role of Big Data Analytics in Gaming
    10 Min Read
    analyst,women,looking,at,kpi,data,on,computer,screen
    Promising Benefits of Predictive Analytics in Asset Management
    11 Min Read
  • Big Data
  • BI
  • Exclusive
  • IT
  • Marketing
  • Software
Search
© 2008-23 SmartData Collective. All Rights Reserved.
Reading: Zero Latency: An Obsession with Velocity
Share
Notification Show More
Latest News
ai digital marketing tools
Top Five AI-Driven Digital Marketing Tools in 2023
Artificial Intelligence
ai-generated content
Is AI-Generated Content a Net Positive for Businesses?
Artificial Intelligence
predictive analytics in dropshipping
Predictive Analytics Helps New Dropshipping Businesses Thrive
Predictive Analytics
cloud data security in 2023
Top Tools for Your Cloud Data Security Stack in 2023
Cloud Computing
become a data scientist
Boosting Your Chances for Landing a Job as a Data Scientist
Jobs
Aa
SmartData Collective
Aa
Search
  • About
  • Help
  • Privacy
Follow US
© 2008-23 SmartData Collective. All Rights Reserved.
SmartData Collective > Big Data > Data Warehousing > Zero Latency: An Obsession with Velocity
AnalyticsData WarehousingDecision ManagementExclusiveText Analytics

Zero Latency: An Obsession with Velocity

paulbarsch
Last updated: 2011/06/08 at 2:32 PM
paulbarsch
5 Min Read
SHARE

Vendors often promise some derivative of the term “faster” in marketing and sales literature (i.e. faster decisions, quicker time to value, rapid implementations etc…). And to be sure, in plenty of cases, speed wins especially in terms of gaining insights into markets and customers before competitors get a clue. However, when it comes to decision making, too much speed without attention to improvements in logic and business processes can be disastrous.

Vendors often promise some derivative of the term “faster” in marketing and sales literature (i.e. faster decisions, quicker time to value, rapid implementations etc…). And to be sure, in plenty of cases, speed wins especially in terms of gaining insights into markets and customers before competitors get a clue. However, when it comes to decision making, too much speed without attention to improvements in logic and business processes can be disastrous.

It’s easy to confuse “fastest” with “best”. That’s what Jennifer Hughes writes in a Financial Times article on the arena of high frequency trading (HFT). The term HFT refers to buying and selling financial instruments in microseconds with the help of supercomputers, sophisticated algorithms, and in most instances co-location of equipment near stock exchange servers. In HFT, the goal is to make profitable trades faster than competitors, and this means that massive amounts of data must be examined in real time and buy/sell decisions executed in microseconds.

More Read

ai tools for high-frequency trading

Best AI Tools for High-Frequency Algorithmic Trading

Data-Driven KPIs Are Pillars For SME Decision Making In 2021
New Big Data Visualization Platforms Help You Optimize Decision Making
“Something is not Right!” – Don’t Ignore Your Gut When Analyzing Information
Of Baby Black Swans and the Race to Zero

Editor’s note: Paul Barsch is an employee of Teradata. Teradata is a sponsor of The Smart Data Collective.

While an extreme case, high frequency traders are truncating the decision making window between “event” and “action” to near zero. In the previously mentioned Financial Times article, Kevin Rogers of Deutsche Bank says; “With some parts of the market we are getting to the point where the speed of light (is the only constraint).” And certainly, if one company can spot deals and trade faster than another, microseconds can be a significant advantage in profitability.

However, while in many cases speed wins, there are concerns, especially in terms of cost. After all, throwing millions of dollars in compute power to shave off a couple of microseconds might not be worth the investment. “We’re looking at a tipping point,” says Harpal Sandu, founder of electronic trading network Integral Development. “Trading isn’t going to get much faster than a few dozen microseconds—physical machines don’t run much faster than that.”

In addition, making decisions faster than competitors is useless if careful attention is lacking in data input, decision logic (possibly manifesting in algorithm development) and continual process improvement.  Moreover, the best decision today, or even ten minutes ago, might not be the best decision tomorrow, especially because external conditions make for a moving target with governmental policy changes, mergers and acquisitions, new technology development and more.

A final consideration is fragility. In high frequency trading for example, as trading decisions move closer to zero latency, there is less opportunity to remedy a potential mistake whether it consists of a “fat finger order”, or simply a poor trading decision that a company would like to correct. Adding insult to injury, in a complex environment such as stock markets, a poor decision made quickly can cause cascading effects to other players creating a massive market disruption.

In the countdown to zero latency, the focus is currently on speed. However, the returns on faster decision making are diminishing and equal opportunity should also be given to risk management considerations, business process improvement, and monitoring of business conditions to continually upgrade and refine decision making logic.

 Questions:

  • Can speed drastically increase without introducing fragility?
  • Does a focus on speed provide an opportunity for companies to “get better” in how they deliver products and services?

TAGGED: Decision Making, fragility, high frequency trading, speed, zero latency
paulbarsch June 8, 2011
Share this Article
Facebook Twitter Pinterest LinkedIn
Share

Follow us on Facebook

Latest News

ai digital marketing tools
Top Five AI-Driven Digital Marketing Tools in 2023
Artificial Intelligence
ai-generated content
Is AI-Generated Content a Net Positive for Businesses?
Artificial Intelligence
predictive analytics in dropshipping
Predictive Analytics Helps New Dropshipping Businesses Thrive
Predictive Analytics
cloud data security in 2023
Top Tools for Your Cloud Data Security Stack in 2023
Cloud Computing

Stay Connected

1.2k Followers Like
33.7k Followers Follow
222 Followers Pin

Sign Up for Our Newsletter

Subscribe to our newsletter to get our newest articles instantly!

[mc4wp_form id=”1616″]

You Might also Like

ai tools for high-frequency trading
News

Best AI Tools for High-Frequency Algorithmic Trading

9 Min Read
Big data and KPIs
Big DataExclusive

Data-Driven KPIs Are Pillars For SME Decision Making In 2021

5 Min Read
data visualization platforms
Big DataData VisualizationExclusive

New Big Data Visualization Platforms Help You Optimize Decision Making

6 Min Read
Image
Business IntelligenceData WarehousingDecision ManagementKnowledge ManagementUnstructured Data

“Something is not Right!” – Don’t Ignore Your Gut When Analyzing Information

7 Min Read

SmartData Collective is one of the largest & trusted community covering technical content about Big Data, BI, Cloud, Analytics, Artificial Intelligence, IoT & more.

ai in ecommerce
Artificial Intelligence for eCommerce: A Closer Look
Artificial Intelligence
ai is improving the safety of cars
From Bolts to Bots: How AI Is Fortifying the Automotive Industry
Artificial Intelligence

Quick Link

  • About
  • Contact
  • Privacy
Follow US

© 2008-23 SmartData Collective. All Rights Reserved.

Removed from reading list

Undo
Go to mobile version
Welcome Back!

Sign in to your account

Lost your password?