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Using Software Defined Radio for Stock Market Transactions (1154 hits)

Most of our data transmission is done through the internet. By sending data through the internet, we are limiting ourselves to the reliability of physical data lines and access from internet service providers. With the use of software defined radios, a lot of low data requirement transmissions could easily be sent through the air without specialized hardware. Take for instance data transmissions for the stock market. Instead of relying on cables and physical connections for stock trading data transmissions, it could be done through the air. What is the purpose of doing such? Due to company's now competing with very high frequency trades, latency problems are more pronounced than ever, and the use of fiber optic cables is becoming more popular. However, another form of transmission is also creeping up, and that is short wave radio communication. Short wave radio waves are low frequency waves that can travel very far when compared to the amount of power required to transmit the wave. This is because, as discussed before, the lower the frequency, the less power required for transmission. Another characteristic of shortwave radio is that the waves can be bounced off of the ozonosphere, meaning they can be sent across the entire globe. The problem with laying fiber optic cables to every trading center is the cost required to do such. A fiber optic line from just New Jersey to Chicago cost $300 million, making it a financially impractical solution for lower bandwidth requirement data transmissions. In addition to the cost associated with fiber optics, they are in fact very slightly slower in terms of latency at transmitting data when compared to radio waves. By doing the math, the speed of light travels two-thirds of its max speed through a glass core (fiber optic cables), while electromagnetic waves travel close at the speed of light itself through air. This means that radio waves for data transmission would be approximately one-third times faster than fiber optic cables in terms of latency. Although a fiber optic cable will have a much larger bandwidth when compared to shortwave radio setups, the use of the radio could instead be used to initiate a trade or send a very small amount of data that has the core purpose of acting like an initiator. The quicker latency times of radio waves becomes even more pronounced for this application with the recent increase of the use of artificial intelligence for stock market trades. In the near future we may have systems that are completely computer operated in terms of trading and will greatly benefit from the lowest latency forms of data transmission.
Posted By: Alborz Jelvani
Friday, May 10th 2019 at 1:40PM
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