An interesting little insight into the world of high speed stock trading over at ZeroHedge where an advantage of milliseconds over your competitors is the difference between profit and loss.

What do you do if you want to gain a proper edge?

Easy, you build your own high speed fiber cable run directly between Chicago and New York at a cost of around $300 million.

Instead of following rail line routes, you dig your trenches in a direct route over mountains and under swamps and as a consequence reduce the line length by 100 miles and reduce the latency from the competitors 16.33 milliseconds to 13.33 miliseconds. Not too bad at $100 million per millisecond saved.

And why would you go to all this trouble?

Well why not take the quote from someone who should know their subject :

Three milliseconds is three one-thousandths of a second.

However, that’s “close to an eternity in automated trading ,” according to Professor Ben Van

Vliet at the Illinois Institute of Technology.

Adding: “This is all about picking gold coins up off the floor – only the fastest person is going
to get the coins.”

Very well put.