Latency

Latency refers to the time delay incurred during data transmission between a trader's device and a broker's server. This delay is typically measured in milliseconds and represents the interval from when an order is initiated to when it is received and processed. Factors contributing to latency include geographical distance, network congestion, and the speed of internet infrastructure. High latency can result in outdated price feeds.

For a retail trader, high latency can directly impact trade execution quality. It increases the probability of experiencing slippage, where an order is filled at a price different from the one requested. This difference, even a few pips, can affect profitability, particularly in fast-moving markets or for strategies like scalping. Latency also contributes to requotes, forcing traders to reconfirm prices.