High-Frequency trading (HFT).

[Stepstowealth]

Have you ever heard of High-Frequency Trading, HFT for short? Is there any trader in this forum that trades like that? I was with a trader today who mentioned it, and I had to ask. I have never heard of it until today, and I just made my research.

High-frequency trading (HFT) is a trading method that uses powerful computer programs to transact a large number of orders in fractions of a second. HFT uses complex algorithms to analyze multiple markets and execute orders based on market conditions.

It sounds very similar to scalping, but this is scalping that happens at very high speed, but not all brokers will permit this kind of trading.
If you had access to the algorithm required for HFT, would you trade this way?

Read more on it here; https://www.investopedia.com/terms/h/high-frequency-trading.asp#toc-how-does-high-frequency-trading-work

[1714938889]

1714938889

[Oshosondy]

In short, it is scalping from definition but in a way that a bot or something is used to make the trades. I guess some traders are using it. I do not know about this kind of trading until today. But I will prefer to just scalp manual setting the take profit without any automatic buy and sell order or opening and closing position. If any exchange has any bot of this type, I will like to use it but I do not think any exchange will want to have a bot like this.

[logfiles]

High-Frequency trading (HFT) exists even in crypto, but is more common with markets like stocks and is often carried out by big players and corporations that have a lot of resources to purchase very fast computers and also build right next to servers of an exchange or broker. In HFT, even a millisecond matters, so High Frequency traders have to ensure they catch the deal earlier than anyone else.

I don't think there's any trader lying around in this forum who uses that strategy.

Anyone interest can watch this documentary on Aljazeera - Money Bots: The truth behind high-frequency trading

[Faisal2202]

I think I have heard about it before, I mostly get to learn new things on Instagram reels and I watched one trader (an institutional trader) who said he uses algorithms that make hundreds of trades in a few minutes and they are totally automated trades, he was talking exactly what you are saying here. And in the end, he said, the profit ratio is more than 60% to 70% considering the tokens, and time you are trading.

Well, I liked that idea as well, for example, if you take a trade, make a profit, and set the algorithm that if you made some profit like ($10 or 5%) then book the profit and exit the trade, the same goes for loss as well. And then selecting a number of tokens for this, and applying the bot on all of them at HF. And in the end I assume the profit should be made. But I guess its a work of experts.

[alastantiger]

High-Frequency trading (HFT) exists even in crypto, but is more common with markets like stocks and is often carried out by big players and corporations that have a lot of resources to purchase very fast computers and also build right next to servers of an exchange or broker. In HFT, even a millisecond matters, so High Frequency traders have to ensure they catch the deal earlier than anyone else.

I have mostly heard about High-Frequnecy Trading in stocks and it still makes no sense to me. In terms of stocks,  the point of buying stocks is to give your money to a company so that the company grows, allowing your money to grow with it. In the case of HFT, you give your money to a company and you sell it a second later, so what is the point of doing that? The company might as well go private and save itself the troubles associated with the stock market.

[logfiles]

I have mostly heard about High-Frequnecy Trading in stocks and it still makes no sense to me. In terms of stocks,  the point of buying stocks is to give your money to a company so that the company grows, allowing your money to grow with it. In the case of HFT, you give your money to a company and you sell it a second later, so what is the point of doing that? The company might as well go private and save itself the troubles associated with the stock market.

It makes sense because the traders are trying to make profits, and they are doing it much quicker rather that wait for the company stock value to grow, which is a long term thing if you have been observant about stock markets.

If you are a trader and had an opportunity to make quick profits trading Bitcoin, would you still buy bitcoin, sit down and await for several months or years for the price to grow to your desirable profit?

[poodle63]

is this the reason why im seeing so many sell/buy order in exchange with amount that is close to each other as if the number was randomized number still in range within short period and there are so many of such order,
these kind of order really good at giving fake impression that there are many buy or sell order that might indicate people are selling or not since usually in cex buy/sell reflected with color.
on the brighter side, this method make the spread within ask and bid order smaller, giving liquidity, but i still can't grasp the advantage of using such method for these institutional trader.
what are their purpose aside from just scalping that miniscule profit but taking advantage of the big capital, is it really that effective is what im questioning about.

[batang_bitcoin]

I have never heard of it but based on the definition, the bots are ones that will do the trade for you but I do not think that there is any difference from the usual trades that we do aside from the having lots of volumes. Although I think that I have seen some unusual orders when I trade because of how quick they were placed and ordered and maybe that is HFT, I dunno but typically a bot setup it is.

[hd49728]

High frequency of trading will lead amateur traders to more inaccurate and bad trading.

It is for professional traders and who trade with bots, not trade manually. Because trading manually will cause to many emotional decisions that will lead to more bad trading orders.

If you can not use bots for trading with high frequency, don't do this. If you can use trading bot, you must master trading indicators to set up your bots too.

[adaseb]

HFT happens in all markets. Most of the trades on the NYSE are done by HFT. They are also common in crypto.

These aren’t humans, they are bots. They are programmed by humans however. You cannot out trade them. Most HFT need to be as close as possible to the stock exchange such as in NYC so they can get the fastest ping.

What you mean is more like scalping which is done by humans. Basically trading the 1 minute chart. Very difficult to become profitable however. Long term trading is easier.

[hugeblack]

High-Frequency trading is done in platforms that have low transaction fees, and it occurs either to achieve profits from creating hundreds of small transactions, the profit of which is $1 on average. The goal is to create hundreds of these transactions daily to achieve profits or for the purpose of sabotage. This is either in anonymous platforms, which are There is hope in the order table, which leads to pumping the price, but absorbing any liquidity from another user who wants to sell, or the platform itself may represent High-Frequency trading.

[Catenaccio]

High-Frequency trading is done in platforms that have low transaction fees, and it occurs either to achieve profits from creating hundreds of small transactions, the profit of which is $1 on average. The goal is to create hundreds of these transactions daily to achieve profits or for the purpose of sabotage. This is either in anonymous platforms, which are There is hope in the order table, which leads to pumping the price, but absorbing any liquidity from another user who wants to sell, or the platform itself may represent High-Frequency trading.

The trading capital needs to be not too small too.

Exchanges have their limits on minimum trading value and even the minimum trading value can not help traders too much. With small trading capital, they will have to pay more for trading fee so if a trader wants to trade with High-Frequency, it's necessary to find an exchange with low trading fee and the trader must prepare not too small trading capital.

Trading more frequently does not always help to get more profit and if trading carelessly, not skillful, it can cause more losses.

[slaman29]

I sometimes think this is done a lot on DEXes, especially in the early days. Profit was not necessary, but the volume of txs, which Dappradar and others tracked. Bots usually from 1 guy (the company itself) just swapping in both directions so quickly it creates and attracts others to swap.

They don't lose except for fees because THEY are the liquidity providers themselves and earn commissions and LPs and keep staking, then once these tokens are up in demand they make money.

HFT is defined for regular CEXs or even for forex brokers back in the day, so I'm not sure it's the same thing as what I'm talking about, but I would classify it as the same, mainly because of the purpose. Which as @hugeblack says, it's sometimes for sabotage, or for the effect of increasing tx volume.

For small DEX this was very important to attract traders.

[mindrust]

Yes I have heard about it. It is one of the best ways to get poor quick. Since your trades happen on an exchange and exchanges don’t validate your trades for free, every time you make a trade ~1/1000 of your trading volume will go to the exchange’s pocket.

The best traders don’t trade that many times. They trade once or twice a month. They often use weekly or even monthly charts.

The less trades you make, the better it is. That’s why hodlers make the most buck in the long run. Because the chart they use is a minimum 10 year chart.

[MusaMohamed]

Yes I have heard about it. It is one of the best ways to get poor quick. Since your trades happen on an exchange and exchanges don’t validate your trades for free, every time you make a trade ~1/1000 of your trading volume will go to the exchange’s pocket.

Exchanges built their platforms that are their houses so they have every necessary data on buy, sell orders, positions, leverages. They can set up games, order walls and play liquidation games against their users.

Beating the market is hard and beating exchanges is harder. It's their houses, not ours.

The best traders don’t trade that many times. They trade once or twice a month. They often use weekly or even monthly charts.

The less trades you make, the better it is.

Trade with long term and with a trend is good, it also reduces times of trading.

It will make our activities are more similar to investment and reduce risk of making bad decisions.

That’s why hodlers make the most buck in the long run. Because the chart they use is a minimum 10 year chart.

Use this chart and see Bitcoin is very bullish.
https://charts.bitbo.io/yearly-candles/

[Lakai01]

I don't think there's any trader lying around in this forum who uses that strategy.

I think so too, yes. The best and, above all, the fastest hardware with the best Internet connection is what counts for such trades. Large companies like Blackrock, for example, are located directly on the Internet backbone in order to be able to submit trades with as little latency as possible. If, for example, you are a European scalping on the Asian or American market, you usually have no chance, as the latency of 120 - 200ms is far too high to be "the fastest" in the respective trade.

I also do not assume that there are any (successful) scalpers here. Even in very small markets where trading is done manually ... if they still exist at all.