High-Frequency Trading with FPGAs?
An integrated circuit called a Field Programmable Gate Array (FPGA) comprises internal hardware blocks with user-programmable interconnects that may be adjusted to operate according to the needs of a particular application. It has between 10,000 and one million programmable interconnected logic gates. Users or designers can simply carry out specified operations thanks to programmable linkages.
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What is the financial sector’s utilization of FPGAs?
Agility and adaptability are crucial when purchasing or reselling stocks and other assets. Decisions are made in the blink of an eye in the age of computerized trading. High-speed networks provide firms with new information from exchanges and other sources as prices fluctuate and orders arrive and go. With a delivery time measured in nanoseconds, this information is transmitted quickly. A large bandwidth is required to handle the data due to its sheer volume and speed. In order to execute transactions, specialized trading algorithms exploit the new information. Because you can avoid using generic hardware and unneeded software, FPGAs offer the ideal development environment for these applications.
Trading at High Frequency
It can be known as algorithmic financial trading, which uses electronic trading instruments and financial data of high-frequency. Also, it is characterized by fast speeds, high turnover rates, and high order-to-trade ratios. Even though there is no specific definition of HFT, its major characteristics include compelling algorithms, co-location, and very short investment horizons. HFT is the most common type of algorithmic trading in the financial sector.
The key to high-frequency trading (HFT) is speed and reducing latency, the quicker you can run trading methods and algorithms for evaluating minute price changes and executing trade orders, the more likely you will outperform the competition. As a result, there is intense rivalry in this field and a race to achieve zero latency. Market competitors continually invest in more potent systems that can transact in nanoseconds. The HFT companies with the technical resources to keep up with technological advancements will have a competitive advantage.
Why do high-frequency traders use FPGAs?
Since having low-latency HFT systems is crucial, traders and hardware providers have been competing to reduce the overall round-trip latency. Standard high-end processor-based systems can respond to market orders with specialized Network Interface Controllers (NICs) in a matter of microseconds. Designing application-specific hardware accelerators, particularly FPGA-based accelerators because of their flexibility and programmability, began to receive greater attention in the HFT arena due to the necessity to further reduce latency.