What Is High Frequency Trading (HFT)?
High Frequency Trading (or HFT) is the method of trading utilizing computer-automated algorithmic software to buy and sell assets. This software runs extremely complex systems to determine slight inefficiencies in the market and make tiny profits per trade, but to execute millions of trades per day.
Usually the traders with the fastest software will make the most profit as they can out-trade the slower systems.
High Frequency Trading is fairly controversial due to it’s ability to create obscure trends and to exacerbate falling stock prices (Lehman Brothers 2008, Dow Jones flash crash 2010).