What Is High-Frequency Trading (HFT) In the Crypto Market?

Many trading strategies appear to be profitable to cryptocurrency traders, but a few promise an edge over the rest. One such example is high-frequency trading, though it’s evident that it may or may not be perfect for everyone.

In this guide, we’ll explain the ins and outs of high-frequency trading. But do note that this approach doesn’t necessarily guarantee success, as it also assumes that you have the skill set to use it. So, if you’re keen on understanding the HFT trading concept and ultimately applying this strategy to crypto trading, here’s precisely what you need to know.

High-frequency trading (HFT) is a type of algorithmic trading that involves high-speed trade execution in fractions of a second. Institutional investors largely employ this method.

What Is High-Frequency Trading (HFT)?

As the name suggests, HFT is all about speed. This technique uses various algorithms to analyze the smallest price changes and discrepancies between the same asset prices on multiple exchanges. Typically, HFT platforms and systems can automatically open and close several positions per second, aiming for short-term goals that would otherwise go unnoticed by the naked eye.