Low latency refers to the minimal delay or lag time that occurs when data is transmitted from one point to another in a network. It is a critical factor in various applications where real-time or near-real-time communication is essential, such as online gaming, financial trading, video conferencing, and cloud computing. Latency is measured in milliseconds (ms), and lower latency indicates faster data transmission.
Low latency trading, also known as high-frequency trading (HFT), is a trading strategy that relies on ultra-fast computer systems and networks to execute trades with minimal delay. The goal of low latency trading is to gain a competitive advantage by capitalizing on small price discrepancies or fleeting market opportunities that can occur within milliseconds or microseconds.