Technology that was once reserved for the exchanges and institutional traders is now readily available to retail traders: High-speed Internet, market research tools, sophisticated testing platforms, trade automation and direct access trading.
At the heart of this technology is your computer: Where you research and test your strategies, as well as where you initiate your trades themselves. Computers affect how you interface with the markets, and they must be fast, powerful, reliable and stable. Here, we take a look at various PC components and explain what to look for when you are buying, or building, your trading dream machine.
A processor, or CPU, is the “brains” of the computer. It is a small chip that performs the basic math, logic and input/output operations in a computer, interpreting and executing most of the commands from the computer’s hardware and software.
The speed at which your computer runs programs, downloads files and loads images is largely dependent on the processor, although other factors, including the amount of available memory, the type/amount of software that is running and even the cooling scheme, also contribute to the computer’s overall speed. Frequency represents the speed at which the processor runs. It is measured in GHz—for example, you might have a 3.6 GHz processor. One GHz is equal to one billion hertz. While it used to be easy to compare processors based solely on clock speed, you should also consider the number of cores the processor has, the bus speed and cache size.
Cores: Most processors today include multiple processing cores, which work together to process commands. While the cores are contained in a single unit, they are actually individual processors. Having multiple cores means that the processor can work on various tasks simultaneously. Dual-core and quad-core processors are now common, and higher-end systems typically have six cores or more.
Bus speed (FSB): Bus speed (or FSB, for front-side bus) refers to the speed at which the processor communicates with other components on the motherboard, such as memory. Higher numbers indicate higher bandwidth, meaning your system can move data in less amount of time, which can increase performance. Speed is measured in GHz, and often appears as a ratio relative to the processor speed. For example, a processor that runs at 3.6 GHz may have an FSB of 1.2 GHz; its processor to FSB ratio would be 3:1. The smaller the ratio, the more efficiently the processor can work.
Cache: Processor cache is ultra-fast memory that the processor quickly can access. It is used by the processor to store data that is about to be processed or is used frequently. Most processors have multiple levels of cache (L1 cache, L2 cache, L3 cache, etc.). The more cache the computer has (measured in MB, or megabytes), the more data the processor can store for super-fast access, which increases its performance.
What to look for: The fastest (clock speed and FSB) multi-core processor with the largest cache that fits both your needs and budget. Keep in mind that even though it’s easy to add memory to a computer as your needs change, upgrading to a faster processor is not practical for most people.