A form of algorithmic trading where computer systems execute large volumes of orders at exceptionally high speeds, often in milliseconds. These systems seek to exploit minor inefficiencies or price discrepancies across markets. HFT requires advanced infrastructure, low-latency connections, and sophisticated algorithms. It’s primarily used by institutional players such as hedge funds and investment banks. While HFT adds liquidity to markets, it also raises concerns about fairness and flash crashes. Regulatory scrutiny around HFT continues to evolve, but it remains a dominant force in modern electronic trading.
Example:
Algorithmic systems execute thousands of trades per second to exploit small pricing inefficiencies.
