High frequency trading

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Trading activities using sophisticated technological tools and computer algorithms that generate a large number of daily trades at very fast speeds.

Typically at the end of the day there is no open position in the market.

Characteristics attributed to HFT are:

  1. extraordinarily high speed using sophisticated computer programs for generating, routing, and executing orders;
  2. use of co-location services and individual data feeds offered by exchanges and others to minimize network and other types of time delays;
  3. very short time-frames for establishing and liquidating positions;
  4. the submission of numerous orders that are cancelled shortly after submission;
  5. ending the trading day in as flat a position as possible.

See also