What is High Frequency Trading? Here is a quick breakdown.

T1000 may be the best hft traders

You have probably heard of high frequency trading and may have also heard about the benefits of using this kind of trading when buying or selling securities. High frequency trading has been causing quite a stir in the financial markets and stock exchanges. Trading has undergone a facelift from the archaic paper floor traders to ultra fast computer speed trading that will probably soon require a neural net processor like the T1000 has in the Terminator films.

This is because high frequency trading is computer generated. All trades, data and information are transferred from exchange’s servers to traders via computer links.  Trading with sub-millisecond execution. Faster data speeds ensure that investors have the edge over all other buyers to get the best price for their money.

As well a high volume of orders and trades is ensured which means that intelligent systems guarantee faster data transfers with millions of transactions in a day.  Of course, the machines only stay on when they can make money.  When they can’t, they turn off, which some feel was the cause of the May 6th 2010 Flash Crash

With fast data speeds and high throughput of orders, there is a short holding period for any transaction. You also need to be lightning fast to take advantage of any high offer that is available before you are left out.

High frequency traders are proprietary trading firms that uses efficient computers, servers, systems and manpower that will ensure fast trading times with the best results every time.

High frequency traders are also market makers who are always looking forward to getting the best advantage of stocks in the right possible time.

Algorithmic trading versus high frequency trading; these terms may be used interchangeably but are actually not the same thing. Algorithmic trading is when algorithms generated by computers are used to manage exchange orders. Orders are broken down into smaller subsets that will efficiently take advantage of the market in specified times. High frequency trading on the other hand is a subset of algorithm trading.

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