SIN – Budgeting for Latency: If I Shave a Microsecond, Will I See a 10X Profit?

By | January 12, 2010

The trick is to make sure the money being spent to remove delays will be more than reimbursed by the profits achieved in the trading strategy that is improved by it, says Kevin McPartland, senior analyst at Tabb Group.

“If I’m spending $1M to get one microsecond faster, will I make ten times what I was making before?,” he asks. “Another way of putting it is to say that latency budgeting involves making sure, when you spend so much money over so many weeks on an upgrade effort, that you see multiple times the value spent in additional revenue.”

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