Algorithmic systems
What is Latency Arbitrage and how do advanced proprietary firms exploit pricing speed gaps across geographically separate exchanges?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Latency arbitrage exploits microsecond price discrepancies between exchanges or data feeds using co-located servers and ultra-fast connections before prices converge.
How it works
Proprietary firms pay for proximity hosting and direct feeds to detect and act on price lags faster than competitors, a legal but controversial HFT practice.
An example
A firm trades ES futures on a feed microseconds faster.
Risk & limitations
Requires significant infrastructure cost; not accessible to retail traders.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.