How Does Transaction Latency Affect the Profitability of High-Frequency Spot-Futures Arbitrage?
High transaction latency (slow execution) severely reduces the profitability of high-frequency arbitrage. Arbitrage opportunities are fleeting and often disappear within milliseconds.
Slow execution means the arbitrageur might not get the desired price, or the opportunity might be taken by a faster competitor, leading to slippage or failed execution, turning a potential profit into a loss.
