Baud rate is a unit of measurement of symbol rate, which is one of the components that determine the speed of communication over a data channel. It is the rate at which information is transferred in a communication channel, and it is commonly used when discussing electronics that use serial communication. Baud rate is the number of distinct symbol changes (signaling events) made to the transmission medium per second in a digitally modulated signal or a baud rate line code. It is related to gross bit rate, which can be expressed in bits per second. If there are precisely two symbols in the system (typically 0 and 1), then baud and bits per second (bit/s) are equivalent.

The key differences between baud rate and bit rate are that baud rate is the number of signal elements or changes to the signal that occur per second when it passes through a transmission medium, while bit rate is the number of binary bits (1s or 0s) transmitted per second. The baud rate can be higher or lower than the bit rate depending upon the type of encoding scheme used.

Baud rate is important because it determines the bandwidth requirements for transmission of the signal, and it is used for the calculation of the bit rate of a communication channel. It is also a tuning parameter for the transmission of data networking, as it adjusts the network congestion in data networking. When two serial devices are not set on the same communications speed, data interchange will not be reliable.