High-frequency traders (HFTs) are market participants that are characterised by the high speed with which they react to incoming news, the low inventory on their books, and the large number of trades they execute. All this is possible for HFTs because they use automated, algorithmic trading, which enables them to analyse markets and execute trades in under a millisecond. The high-frequency trading industry grew rapidly after it took off in the mid-2000s. Today, high-frequency trading represents about 50% of trading volume in US equity markets. In European equity markets, its share is estimated to be between 24% and 43% of trading volume, and about 58% to 76% of orders.
High-frequency traders (HFTs) are market participants that are characterised by the high speed with which they react to incoming news, the low inventory on their books, and the large number of trades they execute. All this is possible for HFTs because they use automated, algorithmic trading, which enables them to analyse markets and execute trades in under a millisecond. The high-frequency trading industry grew rapidly after it took off in the mid-2000s. Today, high-frequency trading represents about 50% of trading volume in US equity markets. In European equity markets, its share is estimated to be between 24% and 43% of trading volume, and about 58% to 76% of orders.