Latency arbitrage means exploiting the delay between a broker's quote and the faster prices on other venues. A trader with a faster feed sees where price is about to go and trades the stale quote.
It's the reason many brokers ban certain behaviour, add execution delays, or use last look. From the broker's perspective, it's picking off stale quotes. From the trader's perspective, it's just trading faster.
For ordinary retail scalpers, the practical lesson is that brokers monitor for patterns resembling latency arbitrage, and accounts with unusually high win rates on very short trades can attract attention. Trades closed within seconds with consistent profit look suspicious in an automated review.
That doesn't mean legitimate scalpers are in trouble, but it does mean the terms of service deserve attention, and an unusual statistical profile can trigger a conversation.
One practical safeguard is keeping written confirmation of the broker's scalping policy, since vague wording leaves room for disputes after a withdrawal request.
Does the broker's agreement mention latency arbitrage, and how is it defined?
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The latency arbitrage story
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