The permissible delay or time lag within a cryptocurrency trading system between the initiation of an action, such as receiving a market data update or sending an order, and its completion, such as processing the data or confirming the order. These tolerances define system performance requirements.
Mechanism
Specified as maximum acceptable time intervals for various system operations, including data propagation, algorithmic decision-making, order transmission, and execution confirmation. Hardware, network architecture, and software optimization contribute to minimizing actual latency to remain within these bounds.
Methodology
Critical in high-frequency and algorithmic trading strategies where speed confers an advantage. Defining strict latency tolerances guides system design and infrastructure selection, ensuring that trading operations can react effectively to rapidly changing market conditions and maintain competitiveness in quote provision.
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