Latency is one of those concepts that can feel a bit elusive at first but makes sense once you break it down. I won’t rehash it because it’s already been explained here.
Now, why does even a small delay matter? Let me give you an example. Let’s say you’re trading a stock like Apple, which moves pretty quickly during the day. You’re watching the price closely, and there’s a sudden dip. You decide to place an order to buy before it bounces back. But your order takes an extra 50 milliseconds (just a fraction of a second) to hit the server and get confirmed. By the time it’s processed, that dip has already been snapped up by other traders, and the price starts climbing again. You’ve missed the ideal price, all because of that slight delay.
For day traders, these delays can add up, and even tiny slippage (the difference between the expected price and the actual price) can cost you big, especially if you’re making many trades in a day.
This is why latency is important, and why high-frequency traders or hedge funds use ultra-fast connections and co-location servers (where they actually place their trading systems right next to the broker’s servers to minimize that lag).
As for finding a broker with low latency – yes, you can ask around. Pepperstone and Fusion Markets are two trading platforms I personally know of that generally execute orders in under 100 milliseconds.
