High frequency trading strategies are characterized by unusually short position-holding periods. In high-frequency trading, programs analyze market data to utilize trading opportunities that may open up for only a fraction of a second to several hours. High frequency traders compete on a basis of speed with other high frequency traders and need to have the fastest connections with the lowest latency possible in order to run successful strategies.
Low latency trading counts on shaving every microsecond off of a transaction life cycle. Ultra Low Latency can be achieved by placing servers as close to the exchange as possible. By running connections with the least amount of distance and hops as possible, traders can ensure that they are getting the best possible edge in the market.
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