What Is Latency?
Latency is the time delay between when a trader sends an order and when it's executed by the exchange's matching engine. Measured in milliseconds, latency includes: your internet connection to the exchange, the exchange's internal processing, the matching engine's queue time, and the confirmation back to you. For most retail traders, total latency ranges from 10-200ms.
How Latency Works
In crypto, latency varies dramatically by exchange. Centralized exchanges with co-located matching engines (like Binance) offer single-digit millisecond execution. DEXs have latency measured in block times (12 seconds on Ethereum, 400ms on Solana). Cross-chain operations can take minutes to hours. Each step introduces execution risk.
Why It Matters for Traders
Latency matters most for strategies where timing is critical: arbitrage (price differences disappear in milliseconds), scalping (entries/exits are time-sensitive), and liquidation protection (closing a position before liquidation). For swing traders, latency is less important. Understanding your strategy's latency sensitivity helps choose the right exchange and connection setup.
