Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Building GenAI Applications. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Desi Ishtyle Guide to FPGAs: The Future of Lightning-Fast Trading

2 min read

Picture this: You’re at the bustling Zaveri Bazaar in Mumbai, hunting for the best gold deals. You spot a shop offering a fantastic price on gold bangles. But wait! By the time you navigate through the crowd and reach the shop, the price has already gone up. Frustrating, right?

Now, imagine if you had a superpower that let you teleport instantly to any shop the moment you saw a good deal. That’s essentially what FPGA technology does for high-frequency trading compared to traditional PC-based systems. Let’s dive into why FPGAs are revolutionizing the trading world, explained desi ishtyle!

The Old School PC: Your Trusted Ambassador Car

Think of a regular PC-based trading system as the iconic Ambassador car. It’s reliable, does the job, but isn’t winning any races soon.

Here’s how a PC handles a trade:

  1. Market data arrives (like a customer entering the car)
  2. Data travels through the NIC (the car door)
  3. PCIe bus carries data (the driveshaft)
  4. CPU processes the data (the engine)
  5. Memory stores information (the seats where passengers sit)
  6. CPU decides to make a trade (driver makes a turn)
  7. Order goes back through the same route (passenger exits the car)

This whole process might take a few milliseconds. In the fast-paced world of algorithmic trading, that’s like taking a leisurely drive from Mumbai to Pune when you need to be there in minutes!

FPGA: The Bullet Train of Trading

Now, let’s upgrade to an FPGA-based system. This is like hopping onto the Vande Bharat Express – lightning fast and purpose-built for speed. FPGA stands for Field-Programmable Gate Array. It’s a type of integrated circuit that can be programmed to perform specific tasks after manufacturing. In the context of High-Frequency Trading (HFT), FPGAs are used to create ultra-fast, specialized trading systems.

Here’s the FPGA trade journey:

  1. Market data zooms in (passenger steps onto the platform)
  2. MAC receives data (train doors open)
  3. Data handling module processes info (passenger finds their seat instantly)
  4. Trading logic makes split-second decision (train starts moving immediately)
  5. Order formatting prepares the trade (passenger ready to disembark)
  6. MAC sends the order (train reaches destination)

This entire process happens in microseconds or even nanoseconds. It’s like teleporting from Churchgate to Virar during rush hour!

Why is FPGA So Blazing Fast?

  1. Custom-Built Jugaad: Imagine having a car built specifically for driving from your home to office, optimizing every turn and signal. That’s what an FPGA does for trading algorithms.
  2. Parallel Processing Power: It’s like having multiple hands to cook a complex biryani. While your PC is still chopping onions, the FPGA has already prepared the rice, marinated the meat, and is layering the dish!
  3. Direct Dil Se Connection: In a PC, data bounces around like a cricket ball in a fielding drill. In an FPGA, it’s a direct yorker from bowler to stumps.
  4. Minimal Movement, Maximum Action: Think of a PC as running around a busy market to buy ingredients. An FPGA? It’s like having your own personal supermarket right in your kitchen.

Real-World Impact: The Paisa Vasool Factor

Let’s say there’s a sudden announcement that Tata is buying a promising EV startup. Here’s how it plays out:

PC Trader: By the time your system processes the news, decides it’s good for Tata stocks, and places a buy order, the price has already shot up by 3%. You still make a profit, but…

FPGA Trader: Your system has already bought a sizeable chunk of Tata shares microseconds after the news hit the wire, before most humans even read the headline. When the market catches up, you’re sitting on a tidy 3% gain.

Multiply this advantage across thousands of trades daily, and you’ll see why FPGAs are the new MVPs of high-frequency trading.

The Bottom Line: Speed is the New Alpha

In algorithmic trading, being fast isn’t just about bragging rights. It’s the difference between profit and loss, between catching the wave and watching it pass by. FPGAs provide that crucial edge, turning split-second opportunities into tangible gains.

So, the next time you hear about mind-boggling speeds in stock market trades, remember: it’s not magic, it’s probably an FPGA working its silicon charm. In this high-stakes game of digital dhandho, FPGAs are indeed the new kings of speed!

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Building GenAI Applications. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

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