What is latency in stock market?

What is latency in stock market?

Latency in stock markets is the delay that occurs between placing an order and executing it on the exchange. It affects the speed and accuracy of trade execution and can impact the profitability of traders.

 

For instance, Mr. A wants to buy 100 shares of ABC Ltd. at ₹100 per share. He places a market order at 10:00:00 am, but due to high latency, his order reaches the exchange at 10:00:02 am. In those two seconds, the price of ABC has risen to ₹100.05 per share. The trader ends up paying ₹5 more than he intended for his order.

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