How Does Low Transaction Throughput Impact High-Frequency Trading of Derivatives?
Low transaction throughput is highly detrimental to high-frequency trading (HFT). HFT strategies rely on rapid execution of orders and near-instantaneous market data updates.
Low throughput leads to high transaction latency and congestion, causing orders to be delayed or fail. This results in significant slippage, missed opportunities, and the inability to maintain a competitive edge, rendering many HFT strategies unviable.
Glossar
Transaction Throughput Impact
Scalability ⎊ Transaction Throughput Impact refers to the direct effect that the maximum number of transactions a blockchain or exchange can process per unit of time has on the operational feasibility and economic efficiency of high-frequency trading and crypto derivatives markets.
Throughput
Capacity ⎊ ⎊ Throughput, within cryptocurrency and derivatives markets, fundamentally represents the rate at which a system processes transactions or data, often measured in transactions per second (TPS) or orders per millisecond.