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High-frequency trading

High frequency trading is a type of algorithmic trading in which large volumes of shares are bought and sold automatically at very high speeds. It represents a particular investing activity enabled by modern technology, where the algorithm and speed of trading optimize the trader’s earnings.

(HFT) is a type of algorithmic trading characterized by high-speed trade execution, an extremely large number of transactions, and a very short-term investment horizon. HFT leverages special computers to achieve the highest speed of trade execution possible. Due to its complexity, it is therefore primarily a tool employed by large institutional investors such as investment banks and hedge funds.

High-frequency trading is the main reason why individual investors cannot usually hope to compete with large investors within the traditional world of stocks and classic investing, unless they are also aided by a disruptive technology pertaining to DeFi (Decentralized Finance) that can level the playing field.

 

Extra reading:

https://www.investopedia.com/terms/h/high-frequency-trading.asp

https://www.cfainstitute.org/en/advocacy/issues/high-frequency-trading#sort=%40pubbrowsedate%20descending

https://corporatefinanceinstitute.com/resources/equities/high-frequency-trading-hft/ 

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