There are many aspects to consider when looking at trade execution-only services. First, of course, there is the quality of service, charges and the scope for trading different markets, but you also need to consider low latency execution. While latency itself is a complex subject, the concept is relatively straightforward.
What is latency?
The term latency relates to the time taken between a request and response. In this scenario, the request is a trade executionorder, and the response is the execution of the order. Many of us automatically assume speed and accuracy are the same throughout the industry when looking at execution-onlyservices. However, when it comes to low latency executionservices, you may be surprised at the variations!
How can latency be improved?
Low latency execution services depend upon an array of issues which include:-
• Up-to-date computer hardware
• Up-to-date software
• Fast Internet services
• Direct connection to the market
We are constantly investing in the latest hardware and the most efficient trading platforms here at GIS HK Ltd. Consequently, we can offer experienced traders a Direct Market Access (DMA) service. Due to often volatile markets and potential issues with liquidity, direct access to market order books is priceless.
How does DMA work?
Low latency execution services have superseded the traditional means of passing electronic trading instructions. Historically, the system was as follows:-
• Instructions passed via an online trading platform
• Details received by broker’s servers
• Order placed by a broker
• Order placed in the market queue and executed accordingly
Even if we set aside the issue of latency, this four-stage approach to trading can attract delays. Step forward DMA, which allows a two-stage approach to trading:-
• Orders sent directly to market
• Orders executed
This is a prime example of low touch execution with minimal human involvement. Direct access to the market also allows traders to dig a little deeper into order books and get a“feeling” for a particular stock or the market in general. Priceless as a trader!
Low latency execution is crucial
When looking at low latency execution-only trading services, there is a tendency to focus on day traders and those that place orders of a technical nature. However, in reality, all traders should have access to low latency execution services to carry out their orders as quickly and efficiently as possible. Obviously, with day traders often dealing on relatively small margins, the speed of a trade execution-only service is an integral part of their success or failure.
Summary
Here at GIS HK Ltd, we constantly research and invest in the latest technology, monitor trading platforms, and work with the latest computer hardware. This ensures that we can provide and maintain a low latency execution service to our clients. In reality, we are constantly monitoring latency levels and, where applicable, placing pressure on our partners toimprove services.
We live in an era where stock prices can change instantly; profitable trades switch to losses in the blink of an eye. Therefore latency should be a consideration when looking at trade execution-only services