Critics have different views on high frequency trading. While others are open in this innovative way of negotiation, some rain this practice with laughs, saying this causes stock prices to fluctuate and can do harm to investors because of unfair and speculative transactions. Trading high frequency is commonly referred to as HFT is a computerized trading strategy that has been holding a very short time. Clearance of the entire portfolio on a daily basis is one of the characteristics of high frequency trading.
It was way back in 1999 that the system of trading with such frequency came to light. It has a runtime in seconds, and yet that will reduce by 2010 the number of milliseconds, even microseconds. Cameron Smith, General Counsel in Quantlab financial high-frequency trading has pointed out that adds liquidity to the market and aids in discovery. This practice also has a lower transaction costs and is considered an evolution of the traditional media buying decisions. The famous point regarding the development of HFT is that resulted in a fair and transparent and efficient even environment to all traders.
The above paragraphs be curbed by critics, who strongly opposed the application of negotiating with such frequency. It may be noted, however, that despite all these setbacks HFT is growing in popularity in Europe and Asia. It has also been accounted for more than 70% of equity trades in EMAS during year 2010 alone.
§ Finance online say speed is the basis for the high-frequency traders to compete against other high-frequency traders and compete with each for very small yet very consistent profits. In this same makes it a thousand times greater than traditional buy and hold strategies HTF show more dynamic. Just like any other form of commercialisation of high frequency trading, however, also requires a lot of research on behalf of investors. It is best that you equip yourself with a clear cut understanding this method before you test the waters.
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