A (relatively small) subset of HFT is purely latency driven. But the largest sub-category is probably market making. I.e. leaving open a buy order for $0.10 and

A (relatively small) subset of HFT is purely latency driven. But the largest sub-category is probably market making. I.e. leaving open a buy order for $0.10 and a sell order for $0.11, and hoping that both get filled and you net the difference. You're taking real risk, in the sense that your buy order could get filled, your sell order doesn't, and the market moves down, so now you lose money. Latency is pretty important to market making for two reasons. One is because you want to quickly adjust your quotes before the market moves through you. If you're too slow, opportunists will pick you off in the wrong direction. Two is because exchanges mostly follow price-time priority. E.g. if me and you both enter buy orders for $0.10, the front of the "queue" to get matched, will be whoever's order arrives first at the gateway. Not only is that important for getting more opportunities, but generally orders in the front of the queue are less likely to be trade against "toxic flow", where the market moves through you. There's definitely a baseline minimum of latency that you need to play the game at all. But there's tons of ways to compete besides just being the fastest. You can build your own signals to internally predict which way the market moves before it does. You can have superior models to tell you when the risk of "toxic flow" is lower. You can use clever tricks to get to the front of the queue when others aren't paying attention.