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Latency Measurements

Latency is the time between when a request is made, and a response is given.  In relation to financial trading, the latency measurement and precision time protocol can have a direct affect on when a trade is received from a brokerage firm and when a trade is placed. These small increments of time can mean the difference between winning big on a trade, breaking even or losing a lot of money. The more latency management protocols and latency measurement devices are implemented, the better chances of financial trading success.

In the fast-paced world of electronic trading, your trading system’s performance and latency management can make or break deals. Top performers know that it’s critical to invest in improving the performance of a trading system or risk the system becoming obsolete, leading to lost opportunities and less financial gains.

New Wave DV offers best-in-class latency measurements to keep top performers on top. Contact us today for the low latency trading technology you need.

Latency Management and the Different Types of Latency

Electronic latency measurement can be described as the time it takes a single packet of data to get from place to the next. There are numerous types of latency and a variety of factors that can influence latency time. Some of the types of latency that can be experienced through financial trading, include:

  • Network Latency – The factors that influence network latency include: propagation, transmission, storage delays and router processing speed. These factors can influence the overall speed of the data packet delivery process.
  • WAN Latency – If a WAN is busy directing other types of traffic it will create a delay, which influence packet delivery speed.
  • Internet Latency – When it comes to distances in the transmission medium, the number of equipment jumps and server hops that are required all influence the speed at which data packets are delivered.
  • Mechanical Latency – This is defined as the delay from input into a mechanical system or device to the desired output. This delay is determined by physics-based limits of the mechanism.
  • Computer & OS Latency – This type of latency is the combined delay between an input or command and the desired output.

Latency Measurement Solution Factors

Latency is one of the key parameters that must be measured to determine if an automated algorithmic trading system is performing. All the following interpreted factors will provide information regarding the health of the system, the quality of the network, the performance of the interface card, and the performance of the algorithms. These low latency trading technology factors, include:

  • Latency between the incoming information and the trading algorithm
  • Latency between the trading algorithm and the trade execution strategy
  • Latency between the incoming trading opportunity and the actual trade
  • Latency between the stock exchange and the system input

Precision Time Protocol

To undertake latency measurement, precise time information is important, especially for distributed systems. With the Precision Time Protocol (PTP) described in IEEE 1588-2008 (IEC 61588:2009), it is possible to synchronize distributed clocks with an accuracy of less than one microsecond via Ethernet networks.

In latency measuring applications, PTP is used for correlating physical variables. Events are marked with precise timestamps in real time and transferred to a central station for analysis.

Latency Measurement Diagram

Contact New Wave DV Today for Low Latency Trading Technology Solutions

New Wave DV provides best-in-class, ultra-low latency 10G Ethernet FPGA cards with precise time stamp capabilities. Our team’s expertise comes from years of providing low latency trading solutions for the financial market. We deliver on time and on budget in an industry where every second and every penny makes or breaks a deal.

Contact New Wave DV for design and verification solutions for your low latency trading application. Or, view our product offerings to find the technology you need.