Latency-Driven Trading
a.k.a. Latency arbitrage
Strategies that profit from being faster than others, for example trading on a price update before a…
In plain English
Strategies that profit from being faster than others, for example trading on a price update before a slower venue or broker catches up.
Latency-driven trading exploits speed gaps. If one venue's price updates a few milliseconds before another's, a fast trader can buy on the slow venue just before it moves.
Retail brokers often ban latency arbitrage on their platforms and may cancel profits from it. It is a game for firms with the fastest infrastructure.
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