High-frequency trading – the dominant AI in finance

Technologies have changed our world dramatically. There is almost no field left, where we cannot feel the impact of artificial intelligence and robots.

Finance is the major field probably, which has been particularly affected by algorithms and AI. to further improve trading, people come up with various methods and in this article, we will talk about High-frequency trading and its dominance in finances.

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A brief overview of the HFT

High-frequency trading is one of the main methods of algorithmic trading in financial markets. This method involves the use of software that allows you to almost instantly open and close trading positions.

High-frequency trading requires a sufficiently powerful computer and a good connection to the Internet. Any lag or other delay can lead to the fact that you get a loss.

The history of this method dates back to the end of the 90s of the last century when the American Securities Commission SEC approved the use of Forex electronic trading floors. In fact, high-frequency trading is a scalping method in the market.

Over time, of course, the retention time of positions decreased even more. Now it is only a fraction of a second. This high-frequency trading is different from other methods of working with financial assets.

HFT is a very popular method of conducting trading. Various websites including ForexSchoolOnline.com have information about this algorithm.

High-frequency trading involves opening deals in a large volume. Goals are usually very small (given that deals are held for a split second). Sometimes the profit on a single transaction can be as little as a few cents. Therefore, large volumes are important for obtaining large profits.

It should be noted right away that this trading method carries quite high risks. The fact is that it does not imply the accumulation of positions. High-frequency trading is the opening and closing of positions within a few seconds, and sometimes a fraction of a second. Accordingly, there are high risks of losses.

HFT trading is especially popular among those who have a faster Internet access channel. Due to this, a trader, firstly, can get the necessary information faster than others, and secondly – send orders to open a transaction faster than others.

That is, if you have a weak Internet, which is characterized by lags and other delays, it is better not to engage in this type of trading.

How does HFT trading work?

High-frequency trading is carried out according to the following principle. Transactions are opened after you send a request for a purchase or sale. It is important to understand that high-frequency trading, especially on the Forex market, is possible only if the HFT engine is configured at all levels.

What are the prospects for such trading?

The peak of the popularity of high-frequency trading is gradually increasing. The volume of companies providing HFT services is rising. And this is in a situation where technology is constantly progressing elsewhere. It is a technology that is one of the reasons why this type of trading is dominating.

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