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High Frequency Traders want to start using High Frequency radio for financial data
(www.radioworld.com)
this post was submitted on 10 Jul 2023
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From a technology stand point this is intriguing. But that much said, I am anti-capitalist. The one downside to HF radio is that the available bandwidth is tiny. You'd have to create a compression algorith capable of compressing enough data to complete a trade. Also HF is very susceptible to changing atmospheric conditions. I am a licensed ham radio operator.
They aren’t using it to complete a trade across it. You use it to send information about what is happening in, say, NY to trade locally in Tokyo or São Paulo before anyone else knows what happened in NYC and adjusts their own trading strategy.
You basically are arbitraging people’s access to information.
They’ve been doing this from NY to Chicago (using higher throughput) radio links for a while. See flash boys.
But if you have sophisticated algorithms moving fast enough in NY to only send the information that is worth trading on, this sounds compelling.
I tend to have a dim view of HFTs - I think they’re more or less just stealing pennies from lots of folks while pretending that’s liquidity, but I’m not an expert.
I’ve arrived at the same conclusion re: fractions of a penny front-running.