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The Benefits of Automated High-Frequency Trading for Trading Success

In the last decade, high-frequency trading (HFT) has emerged to dominate the trading world. More than 60% of trading in the US was attributed to HFT in 2010, even though it was reported to have reduced in the forthcoming years to around 50%. HFT is nothing but a subset of algorithmic trading that employs high-speed computer systems and real-time data feed to automate trades quickly.

A high-frequency trader can use platforms such as Quant Terminal to execute trading orders at a rapid trade with advanced technological innovation to decipher information faster than anyone else in the market. Complex algorithms used in HFT analyze individual stocks to identify emerging trends in milliseconds and carry out hundreds of buy orders to be sent out in seconds when the analysis finds a trigger.

As a result, making more trades in less time can contribute to maximizing gains for a trader. Highlighted below is everything you need to know about HFT and its top benefits:

Increased Trade Margins at Lesser Risk

High-Frequency Trading commences and ends with zero position in the market. The idea is to rapidly buy and sell on relatively small margins to earn extremely small profits but at a larger volume. Hence, the positions deployed by High-Frequency Trading are relatively small, thereby diversifying the risk spread. For instance, if a High-Frequency Trader has to trade using 50 million cash, they would mostly take many positions, say 500 million, which is almost ten times of capital.

As a result, it translates to greater profits with a high-profit potential at smaller transaction costs and smaller capital requirements.

Smaller Price Fluctuations

HFT along with trading large volumes of stocks and securities, enable traders to leverage small price fluctuations and gain significant returns on bid-ask spreads. Trading algorithms available at automated trading platforms such as Quant Terminal can scan multiple markets and exchanges to spot more trading opportunities and capitalize on slight price differences for the same asset traded on various market exchanges.

Speed of Execution of Trades

HFT can execute trades at a more incredible speed than humans. By using automated codes to act on pre-set instructions with sophisticated equipment and leveraging a faster market data feed, HFT offers a significant speed advantage over conventional trading platforms.

Better Access to Market

HFT has direct access and negates the need to go through a broker to execute their trades. Therefore, any trader can interact directly with all equities’ bid by inserting a quantity and price into their algorithm. HFT eliminates the friction of working through intermediaries, thereby bringing down the cost of trading.

The Algorithms, including those of HFT, actually enhance liquidity for a wide spectrum of investors by enabling long-term and short-term investors direct implementation of their risk intention.

Market Efficiency

Many proponents of high-frequency trading claim that it enhances liquidity in the market. HFT enhances competition in the market as trades are executed quickly, and the volume of trades is also up. Thus, the increased liquidity causes bid-ask spreads to decline, driving the markets more price-efficient.

A liquid market sees lesser risk associated with it, as there will always be someone on the other side of a position. Also, as liquidity improves, it bridges the gap between the price a seller is willing to sell for, and a buyer is willing to pay, further promoting the overall market efficiency.


All in all, algorithms that back HFT are the backbone of this type of trading platform that helps reap the best benefits. To make the most of high-frequency trading, ensure to choose the right algo trading platform that helps you devise the right strategies to execute fast trades. Platforms like Quant Terminal can serve as the engine to power up HFT and optimize your trades’ better margins.