Execution Latency Effects

Execution latency effects relate to the time delay between an order being sent and it being successfully matched on an exchange. In the world of derivatives and crypto, even millisecond delays can lead to significant slippage or missed opportunities.

This latency is influenced by network congestion, exchange server performance, and the physical distance of the trader from the matching engine. High latency can expose traders to front-running or being filled at stale prices.

Minimizing this effect is a primary goal for professional trading firms and institutional investors. It acts as a hidden tax on active trading strategies.