In trading, latency is the time it takes for market data to reach you and for your orders to reach the exchange and return with a response. Lower latency means faster updates and faster execution, which can reduce slippage.
Why latency matters
- Faster execution: Orders hit the exchange sooner.
- Lower slippage: Less price change between click and fill.
- Better queue position: Improves odds in price–time matching.
- Strategy fit: Scalping and arbitrage need lower latency than long-term investing.
The two paths where delays occur
A) Order path (you → exchange → you)
- Your device/app (phone/desktop/API)
- Your network (Wi‑Fi/mobile/wired broadband)
- ISP & internet hops (routing to broker)
- Broker systems (gateway → OMS/RMS risk checks)
- Exchange gateway (order accepted)
- Matching engine (order queued/matched)
- Acks/fills return back along the same route
Delays can come from device load, Wi‑Fi quality, ISP routing, broker queues/risk checks, exchange queues, packet loss/retries.
B) Market‑data path (exchange → you)
- Exchange broadcast
- Broker/feed handler (normalizes data)
- Distribution (to web/app/API)
- Your device/app renders it
Delays can come from vendor hops, broker processing/throttling, internet path, and device rendering (heavy charts/indicators).
Common latency terms
- Market‑data latency: Time for a new quote to reach your screen.
- Order‑to‑ack latency: Time from clicking Buy/Sell to receiving acknowledgement.
- Tick‑to‑trade (algos): Time from price update to your order leaving the system.
- Round‑trip time (RTT): Full loop—your app → exchange → response.
Example
Both traders want to buy 1,000 shares at ₹100. Trader A has ~300 ms order‑to‑ack latency; Trader B has ~50 ms. Trader B’s order reaches the exchange about six times faster, improving the chance to fill at ₹100. If the price ticks up during the delay, Trader A may pay more or miss the trade.
Checklist: common causes of delay
- Home/office network: Weak Wi‑Fi, mobile data, overloaded routers.
- ISP routing: Long paths, congestion, packet loss.
- Device limits: Old hardware, heavy background apps, many browser tabs.
- Broker load: Peak‑hour queues, risk checks, throttling.
- Exchange conditions: Long queues during events/auctions, circuit limits.
- API code: Synchronous calls, excessive I/O, rate‑limit backoffs.
- Chart rendering: Heavy indicators/layouts delaying screen updates.
How to reduce latency
- Prefer wired broadband (Ethernet) over Wi‑Fi/mobile when trading.
- Keep your device lean: close heavy apps/tabs; update OS and the trading app.
- Avoid VPNs/proxies; use a fast ISP and nearby DNS where possible.
- Choose the right platform: APIs/desktop for speed‑sensitive flows; web/mobile for convenience.
- Simplify charts/layout (fewer heavy indicators) in fast markets.
- Use limit and protective orders; plan ahead around major events.
Tip: Use a wired broadband connection and keep your trading layout light to avoid self‑inflicted latency.
What if…
| Scenario | What you should know |
|---|
| You are an arbitrage trader | Very low latency is essential—delays can erase the edge. |
| You are a scalper | Milliseconds matter; use wired internet, lean layouts, and defined orders. |
| You use algorithmic strategies | Optimize tick‑to‑trade: efficient code, asynchronous I/O, and batched order management. |
| Data feels laggy | Check Wi‑Fi strength, CPU usage, browser tabs, and indicator load first. |
| Order acks are slow | Could be ISP/broker load or exchange queueing—compare order‑to‑ack vs data times; try desktop/API. |
Last updated: 08 Nov 2025