It’s Only a Matter of Time: Why Financial Firms Need to Turn to Overclocking
Unlock unprecedented trading speeds with overclocked servers.
In the high-frequency trading world, James Lupton, CTO of Blackcore Technologies, speaks first-hand on why high performance, low latency, and reliability, can make or break electronic trading.
The significance of every nanosecond cannot be overstated. Trades happen in mere fractions of a second, with slim margins dictating outcomes, making speed the ultimate game-changer. Financial institutions are now turning to overclocked servers as a game-winning solution over traditional approaches. In this piece, let’s delve into why overclocking stands as a crucial element in the domain of high-frequency trading.
What is Overclocking?
Since early computer hardware, hobbyists and enthusiasts have been modifying parts to achieve better performance. These early intrepid overlockers pushed their CPUs (central processing units) by adjusting the system’s clock multiplier or front-side bus speed using specialized software or hardware modifications. This often involved soldering or physically altering the hardware to bypass default limitations. As the industry and the hardware matured – and the popularity of not just the personal computer but also computer gaming rose – overclocking became more mainstream. As a result, various vendors started including the ability for the end-user to modify system performance parameters directly in their firmware.
Overclocking and PC gaming are often intertwined today, with most motherboard vendors supporting a generic “auto-overclock” feature that anyone can use. However, to push the limits and extract the most performance possible, overclocking can be intricate and fraught with risks such as overheating, server instability, and hardware damage if not executed properly – a scenario that could prove disastrous for financial institutions managing extensive asset portfolios.
Overclocking is as much an art as a science and requires years of expertise to overclock modern processors with production-grade reliability safely. Yet, the potential gains from adept overclocking can be monumental, especially for the low-latency workflows prevalent in high-frequency trading. Our observations have demonstrated a remarkable increase in clock speed – up to 45% — achievable through expert overclocking. The real challenge, however, lies in consistently achieving this across thousands of systems deployed globally in co-location facilities while maintaining the enterprise-grade tooling and remote management capabilities expected by tier-1 financial institutions.
Why Overclocked Servers Are Crucial for High-frequency Trading
Long before electronic trading with servers, human traders would edge closer to the price source simply to react quicker to trades. While that was a physical process, today lower latency is achieved with co-location, low-latency wireless networking between trading venues, high-performance networking, FPGA, and the best-in-class compute technology. Every part of the stack is optimized and analyzed for speed.
So, the computer hardware that runs and executes trading strategies may only be one part of the puzzle, but it’s as crucial as any other part because you’re only as fast as the slowest link in your chain.
The faster a financial institution’s algorithm reacts, the more likely it is to make a successful trade at the best price. Therefore, their customers are more likely to see a positive investment return.
Enhancing Top-of-the-Line Server Hardware through Overclocking
Deploying an overclocked server with finely tuned components can yield a substantial 38% increase in IPC (Instructions Per Cycle). This means that a trading algorithm can execute 38% more instructions within each clock cycle than the manufacturer’s advertised speed, consequently accelerating the algorithm’s performance. Moreover, a typical specialized overclocked server can slash RAM (Random Access Memory) latency by 34% and cache access by 30% compared to a standard server with the same processor. These enhancements translate into reduced compute time and algorithm performance, enabling trade software to execute strategies and respond to market events with greater agility and, more importantly, faster than competitors.
We can see now that overclocking stands as a vital tool embraced by HFT firms to gain a competitive edge in the lightning-fast world of high-frequency trading. By pushing hardware components beyond their standard limits, these firms can achieve unparalleled speeds and performance, enabling them to capitalize on market opportunities with split-second precision. In the relentless pursuit of maximizing trading efficiency and profitability, overclocking has become an indispensable strategy for HFT firms looking to stay ahead of the curve in today’s dynamic financial landscape.
Overclocked servers are only one of many interesting technologies that electronic trading firms employ. Advanced networking technologies, software accelerators, custom-designed ASICs, and even microwave and laser technology are just a few of the (white) rabbit holes to get lost in.
How can overclocking impact the trading strategy? Let us know on Facebook, X, and LinkedIn. We’d love to hear from you!
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