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High-Frequency Trading (HFT)


The term high-frequency trading (HFT) refers to a method of trading that utilizes powerful computer programs to transact a large number of orders in almost a fraction of a second. 

Understanding the term

High-frequency trading is a form of algorithmic trading that allows transacting a large number of orders in a fraction of a second. HFT trading leverages sophisticated electronic trading tools and high-frequency financial data to analyze the market and execute orders within a short period of time.

Traders using HFT trading tend to be more profitable compared to traders with slower execution rates. HFT is also characterized by high order-to-trade ratios and turnover rates. HFT trading can be applied to cryptocurrency trading but requires some expertise. The scope and potential for success for HFT in cryptocurrency markets are similar to that experienced in traditional markets.

Colocation is one of the most used HFT practices used in cryptocurrency trading. Colocation is applied in the case of a trading server placed as close to the data center of the exchange as possible. As the server is placed in the same facility as the exchange, ensuring minimum latency when it comes to data transmission. 


HFT trading is a unique algorithmic trading method that allows a large number of orders to be executed within fractions of a second. HFT adds liquidity to the markets, eliminating small bid-ask spreads. 

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