Latency refers to the speed of data transmission, which, for online traders, has a notable effect on how fast they can actually place their buy and sell orders.
In the digital world, latency is fairly important. It is literally how fast data can move between different systems. Low latency means data can be transferred more quickly and high latency refers to slower data speed. High and low are relative terms, of course, and as technology has improved, weve seen a shift toward lower and lower latency levels across most of the internet.
Having low latency is especially important for online systems that require accurate timing, such as competitive games and, of course, trading. Online traders want to make sure that their orders are placed as close to when they click Confirm as possible. The longer the delay, the more the price of the asset they are trading may slip. This can affect the execution of the strategy being employed, which is not ideal.
To minimize this issue, most online exchanges attempt to offer the absolute lowest latency possible by employing the latest technology. While this has been true for some time already in legacy trading systems, it is becoming even more important — and demanded — in the new world of cryptocurrency.
In the volatile world of cryptocurrency, latency becomes even more important than ever before, as prices can move swiftly in a matter of seconds. Furthermore, extremely low latency will be essential in bringing institutional money into these platforms.
The digital nature of cryptocurrency, not to mention the hype and uncertainty that surrounds the majority of the space, can lead to substantial volatility in crypto markets. Only a few seconds can make a huge difference in how successful a strategy is. More than ever, traders need to know that their trades are being posted as quickly as possible.
Another latency issue that users encounter on cryptocurrency exchanges comes from a lack of standards or uniformity. One exchange may have great infrastructure and speed, while others are lagging behind. This can cause headaches, as many traders interact with multiple platforms, especially arbitrage traders who se ...
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