The Tick-to-Trade Cycle denotes the total time elapsed from the reception of a new piece of market data, such as a price update or trade (a “tick”), until a subsequent trading decision is processed and an order is successfully transmitted to an exchange.
Mechanism
This cycle comprises several sequential stages: raw data reception, network transmission, data parsing and normalization, algorithmic decision-making based on the new information, order construction, and finally, order transmission to the matching engine or decentralized protocol. Each stage introduces a cumulative latency component.
Methodology
In high-frequency crypto trading, optimizing the tick-to-trade cycle is a critical strategic imperative for competitive advantage. Minimizing this latency through co-location, low-level system programming, and specialized hardware allows trading algorithms to react faster to market events, thereby enhancing execution quality and capitalizing on fleeting market opportunities before they expire.
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