FPGAs in High Frequency Trading

Back in 2009 I did a presentation on why companies needed to be using FPGAs in their high frequency trading:

Why You Need FPGA In Your High-Frequency Trading Business

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Now every man and his dog are trading with FPGAs and the edge is now blunt as a spoon. But rather than a time to walk away it’s time to change tactics. Here’s what you should be doing now:

1. Stop competing in the arms race

Profits for being first to the game are over. Hardware will advance more quickly than you can develop strategies to run on it. Don’t compete in the arms race unless you can buy out Xilinx or Altera.


2. Stop focusing on speed of execution

Trying to get your order out faster than anyone else is a crowded game. Find intelligent strategies rather than fast and stupid strategies. Use FPGAs for what they are good at: fast parallel number crunching. Focus on processing market data to find trade opportunities, not on crunching protocols to save 2 microseconds.


3. Leverage existing hardware

Don’t waste your time developing your own custom hardware. The kind of hardware used in high frequency trading costs too much money to develop and involves too much risk (ironically). But the main problem is the development lead time which means that by the time you can trade on it you can buy something else which is cheaper and faster.


4. Use more data

The next profits will come from FPGA trading platforms that process data streams coming from everywhere and everything. Bring together data from a multitude of sources that are not yet being looked at and find the intercorrelations that can only be exploited by the speed of an FPGA.