What is Latency?

In trading, latency (not to be confused with network latency) refers to the time elapsed between the placement of an order and the execution of that order. High latency presents an undesirable delay between actions, while low latency incurs minimal lag that often amounts to just milliseconds. High latency can significantly and negatively affect trading strategies, particularly for dynamic assets, as market prices may fluctuate in the time elapsed between placement and execution.