high-frequency trading

(redirected from HFT)
Also found in: Acronyms, Wikipedia.

high-frequency trading

Buying and selling large quantities of stocks in split seconds, and making pennies or fractions of a penny per share. High-frequency trading (HFT) is performed entirely by computer algorithms that look for and take advantage of small price discrepancies of the same stock on different exchanges. HFT computers are constantly bidding and offering 100-share lots of thousands of different stocks to determine moment-to-moment prices. In addition, traders can spoof the market by placing large sell orders, cancel them milliseconds later and immediately buy the stocks at a lower price, which they caused by injecting negativity into the market.

High-frequency traders are competing with other high-frequency traders all day long. In order to profit, the buys and sells must be executed immediately, and the shorter transmission pathways between orders and executions make the difference. To speed up the process, high-speed traders locate their computers within the same datacenter as the stock exchange computers or as close by as possible. In the most extreme example, a fiber optic line was laid from New Jersey to Chicago in the straightest line possible in order to shave nanoseconds from the travel time. The futures exchange is in Chicago, and New York-based stock exchanges have their datacenters in New Jersey.

Extremely Controversial
Proponents claim high-frequency trading is simply an advanced form of algorithmic trading like all the other widely used financial formulas. High-frequency traders also claim their systems make a more uniform market and have a stabilizing effect.

Opponents claim HFT is downright deceitful, turning money making into software that executes 99% of its trades with a profit. They claim high-frequency traders make billions per year without contributing any value to anyone but themselves. In the Flash Crash of May 6, 2010, when the Dow swung 1,000 points within minutes, regulators reported that high-frequency trading exacerbated market volatility after the sale of unusually large futures contracts. Had the event occurred at a different time of the day, the effects might have reached around the world. As a result, opponents assert that high-frequency trading could turn the market into greater bouts of chaos in the future.
Copyright © 1981-2019 by The Computer Language Company Inc. All Rights reserved. THIS DEFINITION IS FOR PERSONAL USE ONLY. All other reproduction is strictly prohibited without permission from the publisher.
References in periodicals archive ?
Hft supports almost 3,000 adults with learning disabilities in England and Wales.
Proprietary algorithmic trading (PAT) is known for its subclass HFT, which reacts extremely rapidly to market events.
Established in 1975 in Cambridgeshire before moving to Wales 15 years ago, HFT deals mainly with the oil and gas, nuclear energy, shipbuilding and process industries.
But it leaves further discussion on the topic--like potential HFT criminal legislation or ways to increase criminal HFT enforcement--to future scholarship.
Bid and Ask spreads created an arbitrage opportunity for HFT firms as, for example, they could buy a thousand shares of Apple for $50 and sell them for $50.125 in seconds in different markets, and even in the same market sometimes.
Having worked for Apama since 2005, I witnessed this HFT revolution close up, as Apama was one of the leading complex event processing (CEP) engines that fueled the HFT trading revolution.
"The completion of HFT on Barakah Unit 2 in an efficient and timely manner is the result of incorporating the experience we have from Unit 1, but also from having completed the same test on the APR1400 reactors at Shin Kori 3 and 4, as well as Shin Hanul 1 in the Republic of Korea.
The Hot Functional Teasting (HFT) takes place over a number of weeks and consists of almost 200 individual and integrated tests performed on major systems to check their performance, without the presence of nuclear fuel in the reactor.
particular on the increasing prevalence of high frequency trading (HFT)
High Frequency Trading (HFT) firms need the fastest and latest technology in their arsenal in order to compete in the financial markets.
There has been much controversy around High-Frequency Trading (HFT), ever since its rise in popularity due to technological breakthroughs in the 2000s.
Here, we discuss it, see how HFT algorithms can assess it and assist in finding the best deals.