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Published on Apr 20, 2022

High-Frequency Trading (HFT)

Author: Rubin
#Glossary
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High-Frequency Trading refers to a type of algorithmic trading where a large number of transactions are executed within a fraction of a second. HFTs make the best use of high-frequency financial data based on sophisticated software for market analysis and executing trades within a very short time frame.

Traders using HFTs predominantly focus on rapid gains by quickly moving in and out of trades. This substantially aggregates to a large sum of money. HFTs are also beneficial for the market, as it keeps up constant liquidity, mitigating higher bid-ask spreads.

Some estimates suggest that HFTs make up a considerable trade volume within the global market. But, given the complexity of the algorithms deployed, only large financial institutions partake in HFTs.


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