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Latency benchmarking Meaning

The systematic measurement of the time it takes for data to travel through a system. This is a critical practice for fintech companies and exchanges to ensure their systems are performing at an acceptable level and to identify "bottlenecks" where delays are occurring.

Benchmarking often involves "stress testing," where the system is bombarded with a massive volume of requests to see how latency increases under load. This helps engineers understand how the system will behave during a "Black Swan" event or a market frenzy when thousands of users are trading simultaneously.

For a professional trader, benchmarking their connection to various exchanges is part of their daily routine.

If they notice their latency has increased from 10ms to 50ms, they know their automated strategies may no longer be effective, and they may need to pause their "bots" until the connection is optimized.

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