The Role of High-Frequency and Algorithmic Trading

[nusaiba129]

The use of High-Frequency and Algorithmic trading in finance, also known as algo-trading, is the application of automated electronic systems for trading strategy execution. They are slightly different terms but have similarities and tend to go together.

The core difference between them is that algorithmic trading is designed for the long-term, while high-frequency trading (HFT) allows one to buy and sell at a very fast rate. The use of these methods became very common since they beat the human capacity making it a far superior option.

US Stock Trading
The electronic style of trading first surfaced in the denmark mobile database seventies with the creation of Nasdaq. It was a system that used an electronic bulletin board without computer commands.

Later in 1987, the Chicago Mercantile Exchange implemented a more widespread platform, Globex, that became fully established in 1992. This system traded several assets such as treasuries, foreign exchange, and commodities.

Lower prices and faster execution time drove other exchanges to become electronic.

Humans can’t compute giant volumes of data like a computer can. This served as an inspiration for automated trading hardware and software tools development.

The innovative technology made the whole trading process cheaper and less cumbersome. Today, even people who are not trained professionals can be traders.