HFT (High Frequency Trading)

In different places all over the world today, people trade, buy and sell stocks with the hopes of landing on something that will allow them to enjoy steady earnings, or see profits in the near future. Technology and computers have already become a very important part of the industry of stock market, with computers now doing most of the trading transactions these days. At the same time, they have also opened opportunities for stock brokers to deal with high-frequency trading.

What It Is

High-frequency trading refers to a trend which has been around recently and is still growing. This kind of trading occurs when computers perform stock exchanges at a really high-speed rate, that is, in milliseconds. As you perform buying, selling, or trading stocks online, there is that great chance that your transactions are being done with the use of computers, through high-frequency trading. This only means that the transaction is not handled, or seen by a human. Even though this may prove to be uncomfortable to some people, it can provide an upper hand in this situation because computers buy stocks only at their lowest, and sells only at their highest.

Aside from trading online, big brokerage companies are also known to employ high-frequency trading. As a matter of fact, there are companies that use it since it enables them to search for particular characteristics in the industry. On the other hand, other companies also use it in order to have a good grip on stock moves and currencies. As time passed by, and as more and more companies are availing of the benefits offered by high-frequency trading, there have been debates over the use of this trading since brokerage firms tend to receive faster rebates out of the stock exchanges. There are some who have argued that with this process of being able to transact in milliseconds, those who pay for the fees are disadvantaged. Learn More About High Frequency Trading

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Bottom Line

One thing is for sure. The debate on the use of high frequency trading will continue to run. Still. Technological advancements and processes cannot be stopped. As long as different trading firms still realize the benefits of deploying better hardware and software, as well as faster links of communication, they will still continue to reap all the benefits alongside high-frequency trading. Learn about H F T and the “Efficient Market Hypothesis, from other well informed sources. The Securities and Exchange Commission is looking at reviewing the entire market structure in the United States and is currently working on the best possible response to this ever-changing modern environment. From our point of view, only time will tell the new regulations that will be implemented, as well as whether those regulations will benefit the majority in this industry.

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