Why is latency important in trading?
Latency plays a crucial role in trading because it determines how quickly your orders are executed in a fast-moving market. The lower the latency, the quicker your order reaches the exchange—giving you a better chance to trade at your intended price before the market moves.
Why latency matters?
- Faster order execution: Lower latency means your orders hit the market sooner.
- Reduced slippage: You’re more likely to get the price you expected.
- Competitive edge: In high-frequency environments, milliseconds can determine who gets the trade.
- Higher returns: Efficient execution supports better trade outcomes over time.
Example:
Both traders want to buy 1000 shares of ABC Ltd. at ₹100 per share.
- Mr. Ronnie’s trading terminal has 300 ms latency.
- Mr. Mani’s platform has 50 ms latency.
Mr. Mani’s order reaches the exchange 6 times faster, increasing his chance of executing the trade at ₹100. If the price rises during the delay, Mr. Ronnie could pay more or miss the opportunity.
What if...
| Scenario | What you should know |
|---|
| You are an arbitrage trader | Low latency is essential to exploit price differences before they vanish. |
| You are a scalper | Latency must be minimal—your strategy relies on split-second entries and exits. |
| You use algorithmic strategies | Latency needs vary—some strategies require real-time execution, while others don’t depend heavily on speed. |
Traders on FYERS benefit from sub-50 ms latency, which supports both discretionary and algo trading needs. For latency-sensitive strategies, always use a wired broadband connection and avoid mobile data.
Last updated: 19 Jun 2025
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