How Open Source Trading Systems Improve Profitability

As a trader, you know how thin margins have been stretched. You have to be even smarter, even faster, and even more disciplined to grind out a profit in the world of high frequency trading.

A few seconds can mean the difference between a profit and a loss, so traders need agile, nimble systems that can respond to the complexity and speed of today’s markets.

If a malfunction occurs, it needs to be identified and resolved immediately, preferably by your own support desk or development team, if not by the software vendor. Either way you should have the ability to access the source code of your trading platform to troubleshoot the software to solve issues right away.

Unfortunately, one of the major problems with the current state of trading software is that it is built on the old, brittle, closed proprietary model.

In this article, we’ll take a look at how closed trading systems fail you and how you could save by making the switch to open source software.

What is closed system proprietary software?

If you are currently using trading software, chances are it’s a closed system – in other words the source code is not available to the public.

That essentially means that the only people who can detect or fix problems in the software are employees of the provider, or their outsourced customer service team.

So when something goes wrong like a bug or a defect in the code, the software provider is the only one who can fix it.

Furthermore, the software provider’s major focus is on selling more software, not on making sure the software they already provide is completely updated and bug-free.

We’ll talk about why that’s a problem later in this article when we discuss the benefits of open source software.

When closed systems fail:

The pattern with closed-source software is usually that a defect report will be filed and then there will be a delay as the vendor decides whether or not to issue an update.

Because the system is closed, you have no access to the source code to determine the cause of the problem or make a fix yourself. You lose control of the situation as the vendor determines the timing of next steps.

This delay can cost a fortune in missed opportunities as the software vendor’s team considers when to fix the defect.

Open Source Software:

Open source software offers a different model.

OSS is a software development methodology defined by human readable code made available in the public domain and a spirit of community and collaboration.

When software is open source, the code is available to the public and developers or authors are free to search for bugs, suggest improvements and contribute to the evolution of the software.

How OSS fixes bugs 

One of the great strengths of OSS is its reliability or it’s ability to avoid bugs.

We’ll define bugs as defects, which cause incorrect operation, data loss, or sudden failures of the software.

In fact OSS offers a much faster time to fix than closed systems. Because of the availability of the source code, severe defects tend to be fixed within hours of being detected. Authors who discover a bug will commonly fix it and then report it to the maintainers as well as issuing their own update. Users then have the choice of either using the unofficial fix or waiting for an “official” version.

OSS encourages a large market of early adopters who actively help to debug the software leading to a high level of robustness in open source products.


In computer science the term robustness refers to the ability of a system or software to cope with errors during execution.

Robustness means that software has gone through the necessary troubleshooting it needed and is now ready to function without any bugs defects or problems that can cost you millions of dollars in the blink of an eye. In other words it is reliable.

Because of the network of authors and developers OSS becomes robust much earlier than closed systems do because developers enjoy debugging the code and can gain status and legitimacy for their work. These incentives lead to more debugging and a better overall product for the consumer.

I started this article by having you imagine your trading software malfunctioning, the system crashing and you losing out on the trade of a lifetime.

Bugs and software malfunctions are a part of life in the digital world, but you don’t have to become a hostage to delayed responses from software vendors or updates that take weeks to arrive.

Make the change to open source trading software today by downloading Marketcetera Here and joining the Open Source Software Movement!

How Trading Has Changed, and Why That’s Bad For Proprietary Trading Systems

Trading, whether it’s stocks, bonds, forex, or any other kind of asset class has changed dramatically over the last few years. Technology, the financial crisis, and new regulations among other factors have combined to make trading in 2016 and beyond look completely different than what has come before. This is bad news for the old… Continue Reading

The Future of Trading – Both Faster and Smarter

These days, high-frequency trading (HFT) is a controversial topic in economic discussions. Critics bemoan the proliferation of high-speed trading. They claim it destabilizes global financial systems, while proponents say that HFT is a natural progression in the development of new financial-trading tools. As algorithmic trading continues to advance, the line between human trading and machine… Continue Reading

Awaiting a Truly Democratic Trading Platform

For those naysayers who would claim that democratizing a winning trading platform would create fewer winners by equalizing traders’ strategies and thus remove the spreads from trading, the track record of other open-source development efforts would imply that the reverse is true – Notwithstanding the widespread availability of mechanical trading systems, individual traders are human and therefore trade according to their own individual instincts and desires. Thus, each trade will always have a counter-party at an agreed price, even with enhanced transparency and price discovery across an algorithm-fueled platform. Continue Reading

One Ring To Rule Them All

Traders today increasingly insist on more flexibility and above all, more choices. They want to trade multiple asset classes across multiple markets globally, and they want to have the choice of writing their own algorithms, using their own expert advisors, or relying on broker-provided algos. And, the new generation of traders is also choosy about order routing – They demand the flexibility to route orders through single brokers or multiple brokers or exchanges of their own choice. Continue Reading

The Elusive Definition of High Frequency Trading Pt. II

There is a also a cultural change starting whereby technical people are collaborating virtually and sharing information about the standardized infrastructure… a great example is QuickFIX. Trading firms are able to spend more on intellectual capital – the strategies and the algorithms that will gain them competitive advantage – instead of saddling themselves with large capital investments in expensive and restrictive infrastructure. The level playing field created by this perfect storm of technology and market pressure will bring with it thousands of new entrants into the high frequency trading game. Continue Reading