High-speed trading disadvantage amid Asian trading hours: Why your strategy often falters
In the dynamic world of high-frequency trading, maintaining a competitive edge requires a strategic approach to latency management. Professional trading operations recognise the importance of tailoring their configurations to different trading sessions, as each session presents unique challenges.
During the Asian trading sessions (00:00-08:00 GMT), strategies that perform well during London hours often generate consistent losses. This is largely due to lower liquidity and different market volatility patterns, which can result in wider spreads, slippage, and less predictable price movements. Consequently, strategies that work well during the more liquid and volatile London session are less effective in Asia.
To address these challenges, experienced traders implement sophisticated timing strategies such as Dynamic Latency Management (DLM) and Session-Specific Routing. DLM adjusts execution parameters based on real-time market conditions, reducing rejection rates by 40-60% during off-peak hours.
Maintaining flexible execution parameters is crucial, as strategies with steady 20ms latency often outperform those achieving 5ms peaks but experiencing occasional 50ms spikes. Consistent execution speed matters more than peak performance in high-frequency trading operations.
Infrastructure requirements also vary significantly across trading sessions. During the Asian Session (00:00-08:00 GMT), enhanced infrastructure is necessary to compensate for thinner liquidity. Traders operating on mismatched infrastructure often trade on stale prices, leading to increased rejection rates and unexpected losses.
Advanced latency measurement systems will be essential to understand and optimise timing relationships. These systems will help traders implement real-time price verification against multiple data sources, preventing trading on stale quotes during low-liquidity periods.
The focus during the Asian Session shifts from pure execution speed to price validation and rejection management. During peak London hours, most brokers update prices every 10-15ms. However, during Asian sessions, these updates can slow to 50-100ms intervals.
As trading operations become increasingly complex, with high-frequency traders operating across multiple venues, complex multi-venue execution will become common. Providers like NewYorkCityServers pioneer an approach that focuses on maintaining consistent execution quality across all market conditions.
In the future, more sophisticated price aggregation is expected, which will further complicate latency management. Enhanced quote validation requirements will also be necessary to ensure accurate and timely price updates. By implementing session-specific optimisations and adopting sophisticated timing strategies, traders can significantly improve their performance during challenging market hours.
Read also:
- Trump and Xi speak over the phone, according to China's confirmation.
- Prices of transit tickets in Berlin and Brandenburg are on the rise
- Linde Wins Major Engineering Design Contract for Equinor's Low Carbon Hydrogen Project at H2H Saltend, Progressing Towards a Greener Future
- Economic Growth of Nitric Acid for Electronic Applications Anticipated to Reach 5.8% by 2034
