TCP Retransmission Overhead

TCP retransmission overhead occurs when the Transmission Control Protocol detects a missing packet and automatically requests its resending, consuming extra bandwidth and time. In real-time trading environments, this mechanism can cause significant jitter and spikes in latency, which are detrimental to high-frequency strategies.

While TCP ensures data integrity, the wait time for retransmission can render market data stale by the time it arrives. This is why many professional trading platforms prefer optimized protocols that allow for some packet loss rather than waiting for slow, guaranteed delivery.

Managing this overhead is a key aspect of optimizing trading system performance in volatile crypto markets.