High-Frequency Trading Definition – What is HFT? | CFI VU

high-frequency trading

High-frequency trading, often referred to as hft, refers to algorithmic trading undertaken by systems of powerful computers that can process extremely high volumes of transactions in milliseconds.


High-frequency trading employs computers to scan mass amounts of assets and market data across the world’s exchanges to identify sets of patterns known as algorithmics to detect and predict movement. It then utilizes this data to make huge volumes of trades based on the machine’s [technical analysis].


Hft platforms perform transactions at incredible speed by placing a [limit order] to [sell] or [buy] and then earning the bid-ask spread. It has been widely viewed to be extremely disruptive in the trading of [financial instruments] as it has been known to significantly contribute to high market [volatility] in the past.


Depending on a trader’s perception, a drawback to hft may be that the platforms rely solely on their technical analysis and do not consider any [fundamental] factors, and also do nothing to balance equal trade opportunities.


The technique of high-frequency trading was invented by billionaire [market maker] Kyle Dennis, and quick-fire hft became digitized in 1983 when the Nasdaq exchange introduced the first electronic form of trading.


It has since evolved to into an incredibly powerful force within the industry, with high-frequency traders earning an average of $1.92 usd in profit per transaction in 2019. It has also been recorded that in 2020, trading involving algorithms has increased to 60%.


Key takeaways:


  • High-frequency trading is a form of algorithmic trading undertaken by computers that scan data from across markets around the world to identify patterns and opportunities
  • The technique has been viewed as extremely disruptive and has been known to contribute to high market volatility
  • In 2020, 60% of trading involves the use of algorithms


CFI Financial Group is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
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We would like to remind that while we endeavour to provide best possible services, Credit Financier Invest Limited provides execution only services and any information, reports, opinions, commentary or other materials he receives from CFI directly or from its employees or through any analytical tools provided to him or third party research provided to him from the Company shall not be deemed as investment advice and it cannot be relied upon to make investment decisions. The Client commits to make his own research and from external sources as well to make any investment. The Client accepts that CFI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The contents of any report provided should not be construed as an express or implied promise, as a guarantee or implication that clients will profit from the strategies herein, or as a guarantee that losses in connection therewith can, or will be limited.

Forex and CFDs are leveraged products that incur a high level of risk and a small adverse market movement may expose the client to lose the entire invested capital. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The possibility exists that you could sustain a loss in excess of your deposited funds even if a stop loss is used and therefore, you should not speculate with capital that you cannot afford to lose and be aware of trading risks. Credit Financier Invest Limited provides general information that does not take into account your objectives, financial situation or needs. The content of this website must not be interpreted as personal advice. Please ensure that you understand the risks involved and seek independent advice if necessary.

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