SubSilver

[Venkat]

Latency refers to the delay between market data updates and order execution. Even a few milliseconds of delay can cause a bot to execute trades at worse prices than expected. In volatile markets, high latency often results in slippage, missed arbitrage opportunities, and failed order placements. Bots with lower latency can react faster to price movements, which is critical for strategies like scalping, arbitrage, and market making. Poor infrastructure, slow servers, or inefficient code can significantly reduce a bot’s profitability.

API rate limits restrict how many requests a trading bot can send to an exchange within a specific time frame. When a bot exceeds these limits, requests may be delayed, throttled, or blocked entirely. This can prevent timely price updates, cancel orders too late, or fail to place trades during sudden market movements. For bots that rely on frequent data polling or rapid order management, strict rate limits can reduce execution accuracy and overall strategy effectiveness.

Together, high latency and tight API limits can:

Increase slippage and execution errors
Reduce the profitability of high-speed strategies
Cause missed trading signals and delayed order execution
Limit scalability across multiple trading pairs or exchanges

To minimize these issues, professional trading bots use optimized algorithms, efficient API usage, WebSocket based real time data streams, server infrastructure close to exchange servers, and intelligent request throttling.

Proper handling of latency and rate limits is essential for building reliable and profitable crypto trading bot development solutions.