The use of algorithms to increase trading activity within a short period of time.
High-Frequency Trading (HFT) refers to a trader’s strategic use of complex algorithms on the trading floor such that they can engage in a lot of buying and selling within a very brief period of time. HFT is generally characterized by a combination of sophisticated tools which allow the algorithms to analyze and predict trends ahead of time, and make split-second decisions on the basis of the outcomes of the analyses.
There are many advantages to using HFT, the foremost of which is immediate accumulation of profits. But there are also disadvantages, one of which is that HFT is a high-risk trading strategy.