High-Frequency Trading (HFT) is an asset trading strategy that utilizes advanced algorithms and technology to execute transactions in large volumes and at high speeds, usually within seconds. High-Frequency Trading (HFT) is commonly used by large players such as financial institutions, hedge funds, or institutional investors.
In High-Frequency Trading (HFT), sophisticated trading algorithms are used to analyze market data in real-time and execute buy/sell orders automatically in a very short time. The aim is to capitalize on small gaps in market prices and liquidity to make small but recurring profits.
High-Frequency Trading (HFT) is very popular in the cryptocurrency market which has high volatility and increasing market liquidity. With high order execution speeds, HFT traders can take advantage of small price movements before the market reacts.
However, High-Frequency Trading (HFT) also has risks such as algorithm errors or system failures that can lead to large losses in a short period of time.