Finance glossary
High-Frequency Trading
Definition
Automated trading that executes huge volumes in fractions of a second.
High-frequency trading uses powerful computers and algorithms to execute large numbers of orders in microseconds, profiting from tiny price discrepancies and speed advantages. Firms co-locate servers near exchanges to shave latency. HFT now accounts for a large share of equity volume.
In a sentence
High-frequency trading firms placed servers next to the exchange to shave microseconds off each order.
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