Latency in trading refers to the delay between an action being initiated and the corresponding response. In financial markets, it is critical, as it can impact trade execution, order processing, and market data updates. Latency is measured in milliseconds and can be influenced by various factors including network speed, server performance, and the distance between trading venues. High latency can lead to slippage, where the executed price differs from the intended price, affecting the overall trading outcome. In electronic trading, minimizing latency is essential for competitive advantage, especially in high-frequency trading environments, where every millisecond can significantly affect profitability.
Trading Infrastructure