What is High Frequency Trading?

Here’s a definition recently discussed by the CFTC. High Frequency Trading (HFT) is a form of automated trading  that employs:

a) algorithms for decision-making, order initiation, generation,  routing or execution;

b) low latency technology that is designed to minimize response  times, including proximity or co-location services;

c) high speed connections to markets or order entry;

d) recurring high message rates (orders, quotes or  cancellations), using one or more forms of objective measurement,  including cancel-to-fill ratios, participant-to-market message  ratios, participant-to-market trade volume ratios.

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