If you’re a day trader, then you know how important it is to have a fast internet connection. A slow internet connection can cost you money and cause you to miss profitable trading opportunities. When choosing an internet connection for your trading computer, you need to consider both the speed and latency of the connection. The speed is how fast data can be transferred between your computer and the internet, while latency is how quickly your request for data can get to the data broker and how long it takes for your data broker to respond to your request.
You need to make sure you have the high speed and low latency required to handle the trading software you’re using. Most trading platforms recommend at least a 3 Mbps connection, but if you’re trading multiple markets or using complex strategies, you may need more. You also need to consider how many devices you’ll be using on your connection. If you have multiple trading computers or programs running at the same time, you’ll need more bandwidth (more channels for data transmission) to support them.
Quick note on speed: when downloading a file from the internet, the browser will report download speed in MB/s instead of Mbps. MB is Mega-Bytes, while Mb is Mega-bits, and there are 8 bits to a Byte. Therefore, if you are seeing 3MB/s from those test websites, you likely have a speed of more than 3 Mbps.
To reiterate, for Trading you need both speed and low latency. A high bandwidth connection will allow you to load more charts quickly and update them, but they might lag behind. A low latency connection is important so that there is little to no delay between clicking on different symbols and waiting for your charts to load and also when sending an order to your brokage account so that it is executed promptly. Typically, we find that most traders need at least a 20Mbps connection for trading.
When determining the best Internet, Service Provider (ISP) you will need to look at what technology they employ to get the internet to your door. ISPs are broken up into three main categories Satellite, Wireless, and Physical and we will discuss each of these categories and their subcategories below. We, at Trading Computers, find that physical connections give the best results.
High Orbit Satellites
Beamed down to you from satellites orbiting around the earth at high orbit and offers average speeds with high latency. This type of internet is typically more expensive than other options and is not conducive to trading. The problem is that it takes close to 500ms to send a packet to the satellite and 500ms to receive one back this adds a significant amount of time to each of your requests.
High Orbit Satellites 25-100MBit/s 500-700ms
Starlink Low Orbit Satellites
This is a new technology from SpaceX that is quite impressive. They have hundreds of low orbit satellites beaming the internet down to you at higher speeds and lower latency. This technology is still in beta, but most importantly, it has much lower latency than the high orbit satellites. Latency tends to be around 42ms – 60ms if you are swing trading; this internet connection type would be fine to use.
Starlink 50-150 MBit/s 42-60ms
Cellular (3G, LTE, 4G, 5G)
Wireless internet based on cellular technology is a bit of a mixed bag when it comes to trading. We have found that the latency can be all over the place depending on your location, time of day, and carrier. The good news is that the latency has improved as the cell networks are upgraded to support more data and faster speeds. In general, we would not recommend using cellular internet for trading unless you use 5G in an urban area with good coverage.
3G: 0.5–5 Mbit/s 100–500 ms
4G: 1–50 Mbit/s 50-100 ms
5G :200-400 Mbit/s 15-50 ms
Fixed Wireless Internet Service Provider (WISP)
ISP is a type of internet that uses a line of sight technology to connect you to the internet. These providers typically have towers around your city, and you will need an antenna on your office or house pointed at the closest tower. WISP providers can offer high speeds with low latency if there are no obstructions between your antenna and the shot isn’t too far. Wireless internet service providers can provide a solid high bandwidth and low latency connection, but you will need to check with the providers in your area as if they are overloading their tower with too many radios, your bandwidth and latency can take quite the hit.
WISP 20-150 Mbit/s 10-70ms
Digital Subscriber Line (DSL)
DSL is a type of internet connection that uses your existing phone line to connect you to the internet. The great thing about DSL is that it can offer higher speeds and lower latency, making it good for trading. However, the problem with DSL is that the speed can vary depending on how far away you are from the central office and line quality. Each DSL provider is going to vary greatly, so you will need to check with your local provider to see what speeds and latency they offer in your area also, asking around can be a great source of information when it comes to the reliability of their DSL connection.
DSL 1.5-100 Mbit/s 11-40ms
Cable internet is a type of internet that uses the same coaxial cable as your TV to connect you to the internet. Cable internet can offer high speeds and low latency, making it great for trading. However, the problem with cable is that it can be quite unreliable, and the speed can vary depending on how many people are using the internet in your area. Overall we recommend cable internet service providers. Just make sure to pick the best one in your area, and if you start to have problems, you will need to call and have a technician check your line and adjust the signal to your modem to provide a rock-solid connection.
Cable 50-1,000 Mbit/s 13-27ms
Fiber internet is the newest and best type of internet connection. Fiber uses optical fibers to connect you to the internet, and it can offer speeds up to 5000 Mbit/s with very low latency. Fiber internet is excellent for trading as it provides a rock-solid connection with high speeds and low latency. However, the problem with fiber internet is that it can be quite expensive and is not available in all areas. If you have the choice of a fiber internet service provider, we recommend going with them as they will offer the best connection for trading.
Fiber 50-5000 Mbit/s 10-12ms
If you are looking for the best connection with the highest speeds and lowest latency, Fiber internet service providers are going to be the best, but it’s not available in all locations and can be cost prohibitive. So, from best to worst, we have made a list so that you can easily identify which internet connection type is going to be the best for your trading needs.
- Fiber 50-5000 Mbit/s 10-12ms
- Cable 50-1,000 Mbit/s 13-27ms
- DSL 1.5-100 Mbit/s 11-40ms
- WISP 20-150 Mbit/s 10-70ms
- 5G Cellular 5G 200-400 Mbit/s 15-50 ms
- Starlink 50-150 Mbit/s 42-60ms
- High Orbit Satellites 25-100Mbit/s 500-700ms