Review:
High Frequency Trading
overall review score: 3.5
⭐⭐⭐⭐
score is between 0 and 5
High-frequency trading (HFT) is a type of algorithmic trading characterized by high speeds, high turnover rates, and high order-to-trade ratios.
Key Features
- High speeds in terms of order execution
- Large volumes of trades conducted in fractions of a second
- Utilizes complex algorithms and powerful computers
- Relies on co-location and low-latency connections to exchanges
Pros
- Increases market liquidity
- Improves price discovery process
- Can provide better efficiency in executing trades
Cons
- May lead to market manipulation
- Can increase volatility and systemic risk
- May create unfair advantage for HFT firms