How Does the ‘Tick Size’ of an Asset Affect the Profitability of Latency Arbitrage?

Tick size, the minimum price movement of an asset, significantly affects latency arbitrage. A smaller tick size allows for smaller, more frequent price discrepancies to be exploited, potentially increasing the profitability of latency strategies.

A larger tick size limits the granularity of price differences, making it harder to profit from small latency advantages, thus favoring speed less.