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High-frequency trading (HFT)

Automated trading characterised by very short holding periods, very high message rates, minimal overnight risk and profit-per-trade measured in fractions of a cent.

HFT is a technology category rather than a single strategy. The recognisable families are electronic market making, latency arbitrage between correlated instruments or venues, statistical arbitrage over seconds to minutes, and rebate-driven passive strategies.

What they share is economics: tiny expected value per trade multiplied by enormous trade counts, which only works if latency, fees and adverse-selection are all controlled tightly.

Example: a firm nets $0.0006 per share on 90 million shares a day, about $54,000 daily gross. A single day of being systematically picked off at $0.004 per share on 10 million shares wipes out $40,000 of that — which is why risk controls and feed quality matter more than raw speed alone.

Related: electronic-market-making, latency-arbitrage, colocation, toxic-flow

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