But there’s another method that HFT firms use to turn microseconds into micro-profits: latency arbitrage. Basically, it involves using HFT systems to pick out so-called “stale quotes”, which ...

Michael Lewis's 2014 book Flash Boys brought wider attention to how some high-frequency traders were making millions through latency arbitrage, profiting from microsecond advantages in trading speed.

Latency arbitrage detected in London dark pools What we talk about in Chart 4 above is what leads people to talk about latency arbitrage. A new academic study showed how this can work in ...