Define “Latency” and Its Role in Options Trading Slippage.
Latency is the delay between the initiation of a trade order and its execution on the exchange. In high-frequency options trading, low latency is critical.
High latency can increase slippage because the market price may move significantly during the delay, causing the order to be executed at a worse price than intended. This is especially true for market orders in volatile crypto markets.
Glossar
Latency
Speed ⎊ Latency in financial markets refers to the time delay between initiating a trading instruction and its execution or between receiving market data and processing it.
Options Trading
Stewardship ⎊ Involves utilizing these contracts to manage exposure to assets whose underlying technology or governance may evolve, ensuring capital is not locked into potentially obsolete systems.
Decentralized Exchanges
Access ⎊ These platforms offer permissionless entry to cryptocurrency and tokenized asset markets, democratizing capital deployment into novel financial structures.
Market Orders
Execution ⎊ Market orders, within cryptocurrency, options, and derivatives, represent instructions to buy or sell an asset at the best available price immediately.
Centralized Exchanges
Exchange ⎊ Centralized exchanges (CEXs) represent a critical infrastructure within cryptocurrency markets, facilitating order matching and settlement for a diverse range of digital assets, including options and derivatives.