High-Frequency Trading
a.k.a. HFT
Computer-driven trading that places huge numbers of orders in fractions of a second to profit from tiny…
In plain English
Computer-driven trading that places huge numbers of orders in fractions of a second to profit from tiny price differences.
High-frequency trading firms run algorithms on servers placed as close to exchanges as possible, because a few microseconds of latency can decide who wins. They often act as electronic market makers or hunt fleeting arbitrage gaps.
Supporters say HFT tightens spreads; critics say it can drain liquidity in a crisis. Retail traders cannot compete on speed and should not try.
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