Latency–Alpha Trade-off Across Trading Horizons

Quantify the latency–alpha trade-off across different financial trading strategy horizons for security-hardened LLM-based trading agents, thereby determining how defensive measures affect achievable trading performance.

Background

The paper argues that security defenses need not undermine the dominant swing-trading use case for LLM-based agents, because such strategies may retain profitable opportunities even when market-moving information is processed several minutes after publication. However, this conclusion may not extend uniformly across strategies with different holding periods and execution requirements.

The authors leave unresolved the precise quantitative relationship between defensive-processing latency and retained trading alpha across strategy horizons. Establishing this relationship would inform how security controls should be calibrated for intraday, swing, and potentially faster trading applications.