High-Frequency Trading Systems Explained for Beginners
from web site
As stated earlier, HFT refers to a type of algorithmic trading. The main mission is to execute as many traders as possible within the shortest time frame. Trading periods are extremely narrow. It helps traders take advantage of different market movements.
The main difference between HFT and typical algorithmic trading methods is that the high-frequency method makes it possible to conduct thousands of trades on the spur of the moment. Meanwhile, traditional algorithmic approaches let traders execute only hundreds of trades at a time.
Generally, HFT is a tool for institutions and huge financial organizations. The system relies on complex mathematical algorithms that individual investors may find it hard to get. Advanced technologies make it possible to rapidly analyze thousands of events and news in a matter of seconds. As a result, HFT delivers plenty of additional trading opportunities and market entries.
The main challenge is that HFT comes with specific requirements. High-frequency trading calls for super-powerful computers equipped with cutting-edge software and trading programs to open and close positions in microseconds. In simpler words, HFT can be used to reduce latency when delivering market participants to their main trading destination.
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