18 months with chicago colo.
time for ROI analysis.
the setup recap #
december 2023: deployed chicago colo
location: equinix CH3, chicago
hardware: dell poweredge r640
monthly cost: $450 (server + network + power)
initial cost: $8,500 (server + setup + first/last)
latency improvement #
before (san diego home):
to CME: 42ms avg
to IEX: 38ms avg
jitter: ±8ms
after (chicago colo):
to CME: 1.2ms avg
to IEX: 0.8ms avg
jitter: ±0.3ms
improvement:
CME: 97% reduction
IEX: 98% reduction
jitter: 96% reduction
slippage analysis #
18 months of data:
| period | avg slippage | trades | cost |
|---|---|---|---|
| pre-colo (2023 H1) | 3.2 ticks | 180 | $5,760 |
| post-colo (2023 H2) | 2.0 ticks | 210 | $4,200 |
| 2024 full year | 2.1 ticks | 520 | $10,920 |
| 2025 YTD (6 mo) | 2.0 ticks | 280 | $5,600 |
tick value: $12.50 (ES)
slippage reduction: 1.2 ticks average
annual savings: ~$6,240 on slippage alone
fill quality improvement #
before colo:
fill rate: 89%
partial fills: 18%
rejected orders: 4%
after colo:
fill rate: 97%
partial fills: 6%
rejected orders: 0.5%
improvement:
+8% fill rate
-12% partial fills
-3.5% rejections
ROI calculation #
costs (18 months):
initial setup: $8,500
monthly ($450 × 18): $8,100
total cost: $16,600
savings (18 months):
slippage savings: ~$9,360
fill improvement (estimated): ~$4,200
avoided losses from rejections: ~$2,800
total savings: ~$16,360
ROI: -1.4% (barely break-even)
but…
the real value #
ROI calculation misses:
1. peace of mind
no more worrying about home internet.
no more reboots during trading.
99.99% uptime guaranteed.
2. consistency
same latency every day.
predictable execution.
no ISP variance.
3. scalability
can add more strategies.
can increase position sizes.
infrastructure not limiting factor.
lessons learned #
what worked:
equinix is reliable.
dell hardware solid.
remote management (iDRAC) essential.
what i’d change:
skip the fancy networking.
basic 1Gbps sufficient for my volume.
saved $100/month on 10Gbps i don’t use.
unexpected costs:
remote hands: $150/incident
power spikes during high vol: +$30/month
annual hardware maintenance: $200
current monitoring #
# my colo monitoring setup
class ColoMonitor:
def __init__(self):
self.prometheus_url = "http://colo:9090"
self.alert_thresholds = {
'latency_ms': 5.0,
'cpu_percent': 80,
'memory_percent': 85,
'disk_percent': 90
}
async def check_health(self):
metrics = await self.fetch_metrics()
alerts = []
if metrics['latency'] > self.alert_thresholds['latency_ms']:
alerts.append(f"High latency: {metrics['latency']:.1f}ms")
if metrics['cpu'] > self.alert_thresholds['cpu_percent']:
alerts.append(f"High CPU: {metrics['cpu']:.0f}%")
return alerts
async def fetch_metrics(self):
# prometheus queries
queries = {
'latency': 'histogram_quantile(0.95, cme_latency_seconds)',
'cpu': 'avg(cpu_usage_percent)',
'memory': 'memory_used_percent',
'disk': 'disk_used_percent'
}
# ... implementation
would i do it again? #
yes, but differently:
start with shared colo ($150/month).
validate strategy works with low latency.
upgrade to dedicated only if volume justifies.
for most algo traders:
VPS in chicago/NY sufficient.
$50-100/month.
5-10ms latency good enough.
dedicated colo overkill unless high volume.
who needs dedicated colo #
need it if:
- trading 500+ contracts/day
- latency-sensitive strategies (HFT-lite)
- regulatory requirements
- $500k+ account
don’t need it if:
- trading <100 contracts/day
- swing trading / longer holds
- <$100k account
- strategies not latency-sensitive
tonight (june 26, 2:28am) #
chicago colo 18-month ROI analysis. costs: $16,600 (setup + 18 months). savings: $16,360 (slippage + fills + avoided rejections). ROI: -1.4% (barely break-even on pure math). real value: peace of mind, consistency, scalability. latency improvement: 42ms→1.2ms (97% reduction). slippage improvement: 3.2→2.0 ticks. what i’d change: skip 10Gbps, basic 1Gbps sufficient. recommendation: most algo traders fine with VPS ($50-100/mo), dedicated colo overkill unless high volume.
2:28am thursday. chicago colo 18-month analysis. equinix CH3, $450/month. latency 42ms→1.2ms. slippage 3.2→2.0 ticks. ROI barely break-even on paper, but peace of mind + consistency worth it. lessons: skip fancy networking (1Gbps sufficient), basic hardware reliable. recommendation: most traders use VPS first, dedicated only if 500+ contracts/day.
-AK