BGP Attributes

1. BGP Attributes

Border Gateway Protocol (BGP) is the de facto standard exterior gateway protocol used on the Internet. It’s responsible for exchanging routing and reachability information among Autonomous Systems (ASes). However, simply announcing routes isn't enough. BGP uses a complex set of BGP Attributes to determine the *best* path to a destination. These attributes are crucial for controlling routing policies, preventing routing loops, and ensuring stable Internet routing. This article provides a detailed overview of these attributes for beginners. Understanding these attributes is also relevant for understanding network latency, which can influence certain binary options trading strategies focused on rapid price movements.

What are BGP Attributes?

BGP attributes are pieces of information attached to each route advertisement. They act as tags, providing details about the path the route has taken and characteristics of the AS advertising it. When a BGP router receives multiple advertisements for the same destination, it uses these attributes, in a specific order of priority (described later), to select the best path. Effectively, they are the criteria BGP uses to decide which route is most desirable. They are analogous to considering various factors when choosing between different trading indicators – each attribute represents a different piece of information influencing the final decision.

Types of BGP Attributes

BGP attributes fall into several categories:

Well-Known Attributes: These are mandatory attributes defined in the BGP standard and must be supported by all BGP implementations.
Optional Transitive Attributes: These attributes are optional but, if present, must be advertised to all BGP peers.
Optional Non-Transitive Attributes: These attributes are optional and are not advertised to BGP peers. They are used locally within an AS.

Let's examine each attribute in detail.

Well-Known Attributes

These attributes are fundamental to BGP's path selection process.

AS_PATH: This attribute is a list of all the AS numbers the route has traversed. It's a primary attribute used to prevent routing loops. Shorter AS_PATHs are generally preferred. A longer AS_PATH indicates a more complex route, and thus potentially higher latency, something a trader using scalping strategies would want to avoid.
NEXT_HOP: This specifies the IP address of the next router (within the advertising AS) that the receiving router should send packets to in order to reach the destination. It's a critical attribute for forwarding traffic.
ORIGIN: This indicates how the route was originated. Possible values are:

   *   IGP (Interior Gateway Protocol): The route was originated within the advertising AS using an IGP like OSPF or EIGRP.
   *   EGP (Exterior Gateway Protocol): The route was originated from an older EGP.  This is rarely seen today.
   *   INCOMPLETE: The route was learned from another BGP peer, and the originating AS did not provide origin information. This is the most common value.

'MULTI_EXIT_DISC (MED): This attribute is used to influence inbound traffic from neighboring ASes. It's a hint to neighboring ASes about the preferred path to reach your AS. Lower MED values are generally preferred. MED is similar to analyzing trading volume - a lower value (more volume) can indicate a stronger signal.
LOCAL_PREF: This is a well-known but *non-transitive* attribute. It's used within an AS to indicate the preferred path to reach a destination. Higher LOCAL_PREF values are preferred. It’s a powerful tool for influencing outbound traffic. This is analogous to a trader setting a higher priority to a specific trading strategy based on current market conditions.
Atomic Aggregate: This attribute signals that the advertised route is an aggregate route, meaning it represents a summary of multiple more specific routes. It is rarely used today.

Optional Transitive Attributes

These attributes are carried along as the route is advertised to other ASes.

COMMUNITY: This is a versatile attribute used for tagging routes. Communities are essentially labels that can be used to apply routing policies. They can be used for a wide range of purposes, such as traffic engineering, route filtering, and implementing peering agreements. There are standard communities (e.g., no-export, no-advertise) and private communities defined by individual ASes. Communities are akin to applying specific technical analysis filters to identify particular trading opportunities.
Extended Communities: An extension of the COMMUNITY attribute, providing more flexibility and functionality. They support a wider range of values and can be used for more complex routing policies.
Route Reflector Client: Indicates that the route originated from a route reflector client. This is used in route reflector configurations to simplify BGP deployments.
Originator ID: Used to uniquely identify the originator of a route, especially in route reflector environments.
Suppresion Bit: Used to suppress route advertisements during route flapping events.

Optional Non-Transitive Attributes

These attributes are only used within the AS where they are configured and are not propagated to other ASes.

AS_PATH Segment: Allows for more granular control over AS_PATH manipulation.
BGP Weight: A Cisco-proprietary attribute used to influence path selection *within* the AS. Higher weights are preferred. This is a local decision and is not shared with other ASes. Similar to a trader assigning a confidence level to a particular trading signal.
Color: Another Cisco-proprietary attribute used for implementing policy-based routing.
Decision Tag: A numerical tag used for internal routing decisions.

BGP Path Selection Algorithm

When a BGP router receives multiple paths to the same destination, it uses a well-defined algorithm to select the best path. The algorithm evaluates attributes in the following order (with the most important attributes considered first):

1. Weight (Cisco Proprietary): Highest weight wins. 2. Local Preference: Highest local preference wins. 3. Locally Originated: Routes originated from the local AS are preferred. 4. AS Path Length: Shortest AS path wins. 5. Origin Type: IGP < EGP < INCOMPLETE. 6. MED: Lowest MED wins (within the same AS). 7. eBGP over iBGP: Routes learned from eBGP (external BGP) peers are preferred over those learned from iBGP (internal BGP) peers. 8. IGP Cost to Next Hop: Lowest IGP cost to the next hop wins. 9. Router ID: Lowest Router ID wins (as a tiebreaker).

Understanding this order is crucial for configuring BGP to achieve desired routing policies. The path selection process is akin to a trader applying a series of filters to narrow down potential trade opportunities based on specific criteria – prioritizing some factors over others. For example, a trader focused on momentum trading might prioritize volume and price trends above all else.

Impact on Network Performance & Binary Options Trading

BGP attributes directly impact network performance characteristics like latency and packet loss. A poorly configured BGP network can lead to sub-optimal routing, resulting in increased latency and reduced reliability. This can affect applications sensitive to network conditions, including high-frequency trading platforms used for 60 second binary options.

In the context of binary options, especially those with short expiration times, even small increases in latency can significantly impact profitability. A slight delay in receiving price data or executing a trade can mean the difference between a winning and a losing trade. Therefore, understanding how BGP attributes influence network performance is valuable for traders who rely on low-latency connections. Monitoring network latency using tools like ping and traceroute, and understanding the underlying BGP configuration, can help traders optimize their trading environment. Furthermore, understanding the impact of network performance is vital when employing high-frequency trading algorithms.

Tools for Analyzing BGP Attributes

Several tools can be used to analyze BGP attributes:

Show ip bgp summary: (Cisco IOS) Displays a summary of BGP peers and their status.
Show ip bgp <prefix>: (Cisco IOS) Displays detailed information about a specific route, including its attributes.
BGPView: A web-based tool for visualizing BGP routing data. ([1](https://bgpview.io/))
RouteViews: Another web-based tool for visualizing BGP routing data. ([2](https://www.routeviews.org/))
RIPEstat: Provides a variety of network analysis tools, including BGP data. ([3](https://stat.ripe.net/))

These tools allow network engineers and traders to monitor BGP routes, identify potential routing issues, and understand the factors influencing path selection. Analyzing this data can inform trading decisions, especially when using automated trading systems and applying algorithmic trading strategies.

Conclusion

BGP attributes are a fundamental aspect of Internet routing. Understanding these attributes is essential for network engineers responsible for managing BGP networks, and increasingly valuable for traders who rely on low-latency, reliable network connections. By mastering the concepts discussed in this article, you can gain a deeper understanding of how the Internet routes traffic and how network performance can impact your option trading results. Furthermore, comprehending the interplay between network latency and trend following strategies is critical for maximizing profitability. The ability to interpret BGP data and optimize network configurations can provide a competitive edge in the fast-paced world of binary options trading, especially when using advanced martingale strategy approaches.

|}

Start Trading Now

Register with IQ Option (Minimum deposit $10) Open an account with Pocket Option (Minimum deposit $5)

Join Our Community

Subscribe to our Telegram channel @strategybin to get: ✓ Daily trading signals ✓ Exclusive strategy analysis ✓ Market trend alerts ✓ Educational materials for beginners