High-Frequency Trading (HFT)

High-Frequency Trading (HFT) is a type of algorithmic trading that uses powerful computers and advanced technology to execute a large number of orders at extremely high speeds. These speeds are often in fractions of a second. HFT strategies are typically used by institutional traders and rely on small price differences. These price differences exist for only a brief moment. The goal is to profit from these small inefficiencies by entering and exiting positions faster than anyone else.

HFT firms use complex algorithms, low-latency connections, and co-location services (placing their servers close to exchange servers) to gain a speed advantage. While HFT can improve market liquidity and efficiency, it has also raised concerns about market fairness and stability. This type of trading is not typically accessible to retail traders due to the technology and infrastructure required.

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