How To Set Up A Computer For Automated Trading (Part 1)
I’ve been asked about this so many times yet I do not have the time to go through all the details when people were asking about it. I guess it is a good time to just write down what I know while I am installing one. For those curious minds, I need to install a new computer for my automated systems because the old one was toasted.
I am not talking about HFT here. I am not even talking about trading models that go near 5-second resolution. If you are looking for DIY instruction for HFT hardware this article is not for you because the requirement is completely different from normal automated trading need.
Well, as a retail trader if you are so obsessed with HFT then you should read my old article here.
There is absolutely no point to use top of the line hardware at all.
The latest technological marvel properly is very good for gaming experience with the hacking fun to twist and fine-tune the hardware for best performance. But it is also a maintenance hell for production computer systems that you need to depend on for making money. It is plain foolish to buy these computers and have them crashing on you every other day, putting your trading models at risk of disruption.
What you really need is a functional computer with stable hardware. Those computers that are in the market for a year or two with its hardware drivers and BIOS gone through a few minor releases already are the best ones. They are cheaper. They are fast enough to do what you need with trading which is not that demanding anyway. And best of all, they are stable where you do not have to worry if you will experience hang up or crashes randomly.
There is also no need of high-end graphic cards at all. First, no one is going to look at the screen most of the time. Second, business graphics (drawing lines and boxes) does not demand very speedy graphic processing power comparing to things like 3D rendering. Save those money for your home entertainment computer instead.
As a summary, first choice is to buy the mid-range computers. Like those ones that were the top of the line maybe a year or two ago.
OS choice is dictated by the trading software you are using.
But let’s be real – Windows is pretty much the default choice. So it is not so much a matter of which OS but which version of Windows for your computer.
If you are not familiar with complex multi-user management and security setups, forget about server versions of Windows. First, you will not be able to fully utilize the features of the OS. Second, they are very expensive in comparison to the end-user version.
Side note: If you can still get Windows XP Professional anywhere, keep a license or two. They are very handy for use in virtual machines. I will talk about that in a separate article.
32-bit vs. 64-bit
If all you are tracking is just a few currency pairs, commodities and the indices, then a decent quad core 32-bit computer with 3.5G RAM (Maximum that can be utilized) on Windows XP Professional will do the job just fine. The reason for this is that you are likely going to run just one or two applications with the computer. Windows XP is simple and lightweight enough to get the job done.
If you are doing more than that, like connecting to multiple brokerages (I do), and tracking thousands of symbols in real-time (I do that too), then it is better to go with quad core 64-bit computer with at least 6 to 8G RAM loaded with Windows 7 Home Premium / Ultimate. The reason for this configuration is that you will likely run many trading platforms, each connecting to a specific brokerage for order executions. You may also run multiple instances of the same trading platform so that you can isolate the trading models from interfering each other. 64-bit Windows handle this kind of setup much more gracefully comparing to its 32-bit counterparts.
Both configurations above are medium to low range computers nowadays, making them economical and sensible.