What is High Frequency Trading?
From Trading Ideas
April 9, 2013 - 8:54am
HFT is the acronym that much of the trading community loves to hate. If statistics are correct, it accounts for the overwhelming majority of market volume every day. It’s also so complex and secretive that a relative few know how it works.
It’s high frequency trading, or HFT. Here’s some of what you should know.
What is HFT?
It depends who you ask but everybody’s definition has one fact in common: Speed. A day trader that holds a stock for minutes is slow compared to a high frequency trading firm (a computer) that measures trades in microseconds, or one millionth of a second.
In its most basic form, a firm in the HFT business has created a computer algorithm that trades on market inefficiencies. On Sunday, Marketfy sponsored an HFT webinar. During the session, one of the presenters demonstrated how the S&P 500 futures contract reacted to news microseconds faster than the SPDR S&P 500 (NYSE: SPY) ...
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