What Is High Frequency Trading (HFT)?

Patrick Curtis

Reviewed by

Patrick Curtis WSO Editorial Board

Expertise: Investment Banking | Private Equity

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).

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Patrick Curtis

Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.