High-Frequency Traders Eye Satellites for Ultimate Speed Boost

[Hydrogen]

In the relentless quest to speed up stock trades, space may be the final frontier.

Today, high-frequency traders use microwaves, lasers and advanced kinds of fiber-optic cable to shave fractions of a second off the time it takes to execute trades. It’s a business that depends heavily on the ability to transmit data as quickly as possible between financial centers. price moves in key markets drive fluctuations in other markets, and HFT firms must race from one exchange to another to adjust their trading activity in light of the latest data. Otherwise, they risk losing money to faster HFT firms with fresher information.

Satellite networks orbiting a few hundred miles above the Earth’s surface could represent the next technological leap forward. Starlink, deployed by Elon Musk’s Space Exploration Technologies Corp., has already launched more than 1,000 satellites. Amazon.com Inc., OneWeb Global Ltd. and Telesat Canada are building rival networks set to go live in the coming years. And a UK. space entrepreneur is planning a network that would cater to the high-frequency trading crowd.

The satellites in such constellations would orbit the Earth far closer than older generations of telecommunications satellites. They are also smaller and cheaper to launch. This makes it possible to deploy networks of hundreds or thousands of satellites, in which at least one satellite is always nearby, no matter where on the planet you are, even as the satellites whiz by at thousands of miles an hour. The more advanced projects plan to use laser links between satellites to create speedy data networks covering the globe. With such a network, a Chicago trader could beam U.S. futures prices to a satellite overhead, which would relay them over a chain of several satellites, then down to London. Such space-based connections could be faster than existing networks on Earth.

That has the potential to change the way that high-frequency traders send data between exchanges in North America, Europe and Asia.

....



I made a post about a hardened orbital blockchain potentially resembling bitcoin's next evolution here:

https://bitcointalk.org/index.php?topic=5326006.0

But had not considered a speed advantage in trading. WIFI and radiowave based communication are often slower than a hard line due to the added abstraction layer of encryption. The main exception being ground based internet censorship, surveillance and national firewalls. Which often produce extremely slow internet speeds due to multiple redundant routing paths and deep packet inspection.

The speed advantage in HFT trading (AFAIK) is usually arbitrage based. With trading houses seeking ways for their trade to execute before others, due to market saturation driving them to compete for the same identical trades.

Could bitcoin's next evolution be defined by a hardened orbital blockchain capable of executing bitcoin transactions. With merchants, traders and consumers executing transactions utilizing satellite based modems or smart phones. This could allow crypto financial networks to continue operating in the event of catastrophic natural disasters and also electrical grid outages.

These questions were posed, in the previous thread. For whatever reason at least half of the responses were sidetracked by myanmar.

Now that wall street appears to be vetting the benefits of satellite based trading and transactions, perhaps cryptocurrency advocates can begin to see some of the benefits.

[Hydrogen]

is this already applicable to crypto trading or just stock for now!

It only applies to stocks.

Hedge funds and investment banks race to execute arbitrage trades where a single asset is priced differently in two different dark pools. The stock market equivalent of buying bitcoin for $53k on one exchange. Moving to another exchanges where its $54k to sell. Arbitrage trades. Except executed at high speed by an automated algorithm in a dark pool which is not accessible to the general public.

That's where the speed aspect to it factors in. Its not something which applies to casual day traders.

[2double0]

Isn't it too early for the crypto when we don't have enough audience converted to traders yet? If the traders make it possible, then it will boost the prices of all coins that will come under the list of being traded through the use of this technology. But won't this be an open invitation to those companies (whose satellites will be used here) to monitor every user's trades breaching their privacy and may even provide the data to government authorities if asked?

[Mauser]

This is taking trading to the next level, never thought a mare trading will require such advance technology to be executed, is this already applicable to crypto trading or just stock for now!
If so, would it make a significant difference using this high frequency trade as against normal trading in terms of earning more profit and less losses? Am just curious.

I do think that high frequency trading can outplay the average trader just by the speed of the execution. Having fast internet and a short connection to the exchange can make the difference in how fast your trades are getting picked up. So in times of high volatility it is more important to be among the first to sell or buy. Selling these premium satellite internet access to hedge funds is a good idea in my opinion. Companies need a revenue to provide the internet services, and selling to the highest bidder is just normal business. On the other hand selling these service enables companies to offer internet for free in areas where no other form of internet is possible.

[hatshepsut93]

In high-frequency trading, you're always going to be beaten by someone who sits 100m away from an exchange if you're located in another country. Satellites would still have a lot of lag compared to direct fiber optics connection with the servers.

Could bitcoin's next evolution be defined by a hardened orbital blockchain capable of executing bitcoin transactions. With merchants, traders and consumers executing transactions utilizing satellite based modems or smart phones. This could allow crypto financial networks to continue operating in the event of catastrophic natural disasters and also electrical grid outages.

If we'll have this orbital Internet, then it doesn't change much from what we have now. PayPal would also able to work in the event of natural disasters, maybe Visa too.

[amishmanish]

High speed, globe spanning, always live internet services like Musk's Starlink project would result in quite a lot of changes. I had no idea that such a use-case could also exist. If it gets affordable enough, what stops the biggest traders from launching their own constellations. The space debris and junk though.

In high-frequency trading, you're always going to be beaten by someone who sits 100m away from an exchange if you're located in another country. Satellites would still have a lot of lag compared to direct fiber optics connection with the servers.

You cannot have all the exchanges at the same place for sure. This is about arbitrage opportunities between geographically separated exchanges. Though a constellation of micro-satellites could very well act like your own guys sitting at 100m from every exchange.
The idea about the application to Bitcoin surely makes sense as far as relaying transactions is concerned. Yet they'll have to be mined here on farms at earth so I don't see how that benefits. Still, with so much of the stock market activities and products being mirrored on crypto now, the logical thing could be to have such a network for Bitcoin and then out-trade these HFT's with synthetic stocks on the blockchain. Then again, Due to the mining and smart-contract execution delays, price settlement will be far slower compared to the centralized clearing houses of the exchanges.

 

[zanezane]

This is taking trading to the next level, never thought a mare trading will require such advance technology to be executed, is this already applicable to crypto trading or just stock for now!
If so, would it make a significant difference using this high frequency trade as against normal trading in terms of earning more profit and less losses? Am just curious.

HFT has been going on for a long time now and currently they are around 270 thousand trades per nanosecond. I thunk taking it to the next level is the only way to go because you can't stagnant. Last I checked they are trying to switch to microwave towers because it is far faster than fiber optics that they are currently using.

[sheenshane]

It might this is an advantage that everyone will soon have access to.  However, these traders have kept a lot of profits already when that time comes.

However, I personally don’t think that this will actually outplay other traders.  It’s not always the information that has to be considered, we don’t always know what’s gonna happen.

There is a lot of circumstances that time doesn’t matter but the knowledge to the market.  Even if you have the quickest fiber optic in the world if you do not have an idea of what’s going on, or keep your internet and watch youtube entertainment videos instead IMO.

[TimeTeller]

It might this is an advantage that everyone will soon have access to.  However, these traders have kept a lot of profits already when that time comes.

However, I personally don’t think that this will actually outplay other traders.  It’s not always the information that has to be considered, we don’t always know what’s gonna happen.

There is a lot of circumstances that time doesn’t matter but the knowledge to the market.  Even if you have the quickest fiber optic in the world if you do not have an idea of what’s going on, or keep your internet and watch youtube entertainment videos instead IMO.

Very true. Your in-depth knowledge of the market is still the vital factor here how can you take advantage the market.
The speed of your connection is just a very good means to execute your orders.
And not many people are skilled in that kind of activity even if they have the fastest connection on this land.
So to compete with them, just enrich your strategies and that will be your edge to these people having faster speed connection.

[dothebeats]

HFT traders really are pushing the speed of their algorithms, machines, and other aspects to their trade up to the last nanosecond, it seems. They are already capable of making tens of thousands of trades in as fast as 10 seconds but apparently that doesn't seem to be enough. There'll come a time wherein HFT traders are the ones battling against each other, as most other traders are already out of the field, especially the retail investors and those who cannot buy their own infrastructure and that little black box that does most of the magic tricks.

The satellite idea is actually pretty neat, although it'll again be somewhat of an issue considering that Elon's Starlink was once in the heat of the space debris argument.

It's amazing how much they are capable of pushing technology to its limits, especially if what's at stake are hefty profits.

[LUCKMCFLY]

This topic has fascinated me for a long time, I have looked for many books that refer to high frequency trading, when I discovered that satellites could intervene in high frequency trading projects I thought that in the crypto market it is also very feasible.

Those who handle High Frequency Trading in particular are very few, that is, the great whales, because they are the ones that are capable of moving the market with that intensity, and normal traders do not have the slightest opportunity against these algorithms, the speed of Human it would not reach those of those robots, in microseconds the largest movements occur, the Stop Loss jump, they lose positions, in reality I see it as a very unequal war for now.

[Gozie51]

I do get it. Low internet coverage is like using bare foot to chase car running on 120km in minutes. Your internet speed defines your accessibility. As an individual while trying to access some platform and news portals, you see that it isn't fast because your internet capacity. The satellites capacity are what the whales and big firms are relying on for high speed connectivity. Some government are even behind in this kind of technology.

[Kong Hey Pakboy]

It only applies to stocks.

That's where the speed aspect to it factors in. Its not something which applies to casual day traders.

Imagine if there is already an HFT that applies on cryptocurrency, that would be really revolutionary since the trading game is going to change dramatically for bitcoin market and cryptocurrency market, as far as I know HFTs are investing co.panies so the first to move in cryptocurrency market is going to be profiting big time.

[franky1]

most HFT have their trading floors(buildings) within 60miles of an exchange
having fibre is better than the interference risks of satalites and the 200miles distance a data has to travel up and down the atmosphere

satalite are only useful for data thats more then 200miles.. but with interference its more like the effect of having fibre 300miles

so what traders do is not work 200-300miles away with a latency of 300%-500% instead they work within 60 miles of a exchange and have private bespoke fibre cables just dedicated to going to the exchange

elons starlink is for those in area's where fibre and 5g is hard to lay out. (people living offgrid-deserted areas)
its aim is not to offer HFT.. as HF traders already have fast dedicated lines. heck their lines are not used by other residents or other businesses so there is no speed bottlenecks due to data congestion.

elons starlink cant offer that