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What 250 ms of latency costs in pips: M1 range arithmetic, quiet hour against news

People quote latency in milliseconds and spreads in pips, and rarely connect them. A rough conversion is possible.

Assume an M1 average range of 1.2 pips in an ordinary London hour, and 15 pips in the first minute after a major release. Those are made-up inputs, so substitute your own from the chart.

Price doesn't move at a steady speed. Under a random walk model, the typical move grows with the square root of time. For 250 ms out of 60 seconds, the factor is the square root of 0.25 / 60, which is 0.0645.

Quiet hour: 1.2 x 0.0645 = 0.077 pips.
News minute: 15 x 0.0645 = 0.97 pips.

For a 600 ms round trip, the factor is 0.1:

Quiet hour: 0.12 pips.
News minute: 1.5 pips.

Compare those to a 0.8 pip spread. In the quiet hour, 250 ms is about a tenth of the spread, so a VPS that saves 200 ms gains roughly 0.07 pips a trade. That's $0.70 per lot and doesn't change a strategy's outcome. In the news minute, the same delay is about a full spread and more. At 600 ms it's nearly two spreads.

This is a model, and ticks arrive in bursts and jumps, so real moves are lumpier. But the order of magnitude shows when speed matters: when the market is moving fast, not on average.

To put a dollar figure on it for a scalper doing 20 trades a day with 0.5 lots, a gain of 0.07 pips per trade is 0.07 x $5 = $0.35 per trade. Over 20 trades that's $7 a day, or about $154 a month. That's real but small. If you pay $30 a month for a VPS, it covers its cost on that arithmetic alone, though the main reason people run one is uptime, since a home connection dropping with a position open costs far more than 0.06 pips.

The square root scaling gives a way to test whether your own fills are slower than you think. Pull the timestamps for your order send and the fill, if your platform shows milliseconds in the journal or logs. Subtract them for 30 market orders, then compute the average. If the average is 400 ms and the broker's website says 50, either your path to the server is slow or the server holds orders. A speed test to the broker's server address is a useful comparison, and the numbers tell you which side to look at.

One more factor is how the model understates news. Right after a release, the move isn't a random walk of small steps. There can be a jump of several pips between two consecutive ticks, and a 250 ms delay may mean the difference between a fill at the old level and one a pip or two away. So for a news strategy, treat the 0.97 pips as a floor. And keep in mind that the broker's side may add a deliberate hold time, which is a feature you can look for in the execution policy.

A scale check for yourself: take your M1 chart, look at the biggest range candle in the last month in a non-news hour, and compute the same 0.0645 factor. If your largest ordinary candle is 4 pips, then 250 ms corresponds to 0.26 pips at the extreme, still under half a spread. For every trade type you use, ask whether the typical move during the delay is bigger than the profit target's margin for error. If it isn't, then spend your attention on the spread and the stop distance, where the larger costs are.