Anyone with experience trading with a Co-Located Server?

[vern13]

I trade with AMP/CQG, and they have been offering a Co-Located Server option for several months now. A few basic questions:

1) What exactly is a Co-Located Server?

2) What function is a Co-Located Server supposed to perform that is superior to regular server side order storage?

3) Does anyone have practical experience trading with a Co-Located Server, is there a measureable difference in the fills that warrants the 99$ per month fee?

Any input is much appreciated......anecdotal evidence welcomed.

[NinjaTrader_Brandon]

Hello vern13,

Thanks for writing in.

I would recommend contacting AMP for full details about their Co-Located Server
A Co-Located Server is a system that you would install NinjaTrader on that is close to the exchange. You then would remotely connect to the server. Some Co-Located Servers have direct connections to the exchange. These servers should be very reliable and very fast to help prevent system down time (crashes/ disconnects/ ect) and improve fills.
Other users may reply to this topic with their personal experiences with these.

[DeskTroll]

Hi vern13,

My opinion is that paying for space on a co-located server is somewhat pointless except for very large accounts, and benefiting mostly those that are making money renting out the servers and here's why..

Even if you are trading via a CLS that will not change the internet connection you have, ping, upload/download speed is not affected (sped up) from your trading desk to their server (they still require an internet provider as well as you). The idea is that these servers will get you in queue faster at the exchange's servers, while this may be true I get fills nearly immediately literally fractions of a second without a CLS. They advertise saving you milliseconds of transit time thereby reducing slippage etc. but I personally have found little if any slippage outside of fast market conditions. If there are a few hundreds of contracts sitting at the bid and ask (limit orders) when you market in and you are experiencing slippage regularly I would seek another broker. I don't know if this is true but one broker once told me that repeated slippage could be a sign the broker is taking the other side of your order.

I trade size so I am always watching per minute volume for liquidity and I must say using Ninjatrader combined with Dorman gets me fills as fast as I click Buy/Sell Market.

[vern13]

Dorman runs Rhithmic data, correct?

This is an interesting topic.....when I first started trading I suspected that my broker was playing the middle...the fills were terrible and consistent.

[DeskTroll]

Yes, Rithmic is available thru Dorman. I'm a former Mirus client but was totally fed up with their mishandling of the Zenfire debacle so removed them from the mix.

[FMtrader]

I have wondered about co-located servers also. If one is running an automated trading strategy then I believe it makes some sense to consider a co-located server as the reliabilility of your internet service is no longer so important.
If one is manually trading and you suffer from an unreliable internet connection (say a few drop outs per day) then it is only a matter of time before a trade will come unstuck. If your broker handles server side OCO orders the risk will be lower than if Ninjatrader is handling the OCO orders. The worse case scenario is when you enter a trade and then your internet connection immediately fails. In this circumstance, particularly if Ninjatrader is managing the OCO orders (profit target and stop), one's stop may not even get placed on your broker so you have a completely unprotected position and no connection to your broker.
Having a co-located server goes a long way towards protecting against the above scenarios. If you have a very reliable internet connection the risk is obviously less and a co-located server is not as important. Unfortunately my internet connection is sh** and I don't have alternatives that are likely to be better. My current thinking is that once my order sizes start getting larger and trading becomes my only source of income I will migrate to a co-located server.

[glennts]

Tried a co-located server for 6 mos and decided to not use it. It is perfect for automated entry/exit strategies but for discretionary trading using ChartTrader I found it not advantageous. The main issue was latency between me and the co-located server. You grab the ChartTrader marker line indicating your order to move it a few ticks and the latency ( @ 60ms) was enough to make this a hit or miss proposition. With Rithmic, whose execution servers are in the same location as the CME servers, I decided it was best to place orders using Rithmic's r|Trader DOM. To do this you need your broker to permit multiple logins to your Rithmic account, one for NT and a second for Rithmic r/Trader