What Is High Frequency Trading?
High Frequency Trading
Also called as the HFT, this is a type of program trading platform that uses the fastest algorithms and the fastest and the most powerful computers for trading purposes. These are generally used by large investment banks and hedge funds along with institutional investors. These entities use HFT to their advantage to transact a huge number of orders at extremely high speeds, with some powerful computers.
Features of High FrequencyTrading
The high frequency trading platforms have some innovative features which make them quite profitable for large corporations and entities. They allow traders to execute orders that can reach up to millions of orders, without a single glitch. This also has the ability to scan multiple markets and the exchanging happens in matters of seconds. In an open market, this platform gives a huge advantage to traders.
These trading systems make use of complex algorithms to analyze the markets and also to spot the emerging trends within a few seconds. Here, speed is the key to performance. The shifts in the markets are easily recognizable by institutions and traders using high frequency trading. Therefore, they are able to send out baskets of stocks at advantageous bid-ask spreads. The whole system lies on the fact of anticipating the trends and beating the trends, to gain favorable results for the traders. The significant profits made by traders using this trading platform are enormous, which is why it is quite popular.
However, the HFTs are sometimes viewed as unethical and unfair, because they seem to give large firms a lot of advantage. In the process, the smaller firms are losing out. The criticism that HFTs have received is a bit harsh. But, the other side of it is that HFT has proved to be very beneficial in terms of improved market liquidity.
Some other apps which help in auto-trading
A few other apps have begun to dominate the marketplace, which are more of automated versions, where decisions are based on mathematical programs and algorithms. The Fincrowd app is one such trading solutions app that helps you understand the working of stock markets and also maximizing your profits. Just as high frequency trading uses computers and software, this app also uses innovative technology helping many trader and investors understand the nuances of stock market trading. Making use of such financial products is a great way to get to know the workings of the stock market.