Stock trading has advanced to such an extent that powerful computers, as in many other fields, are used for transacting innumerable orders at high speeds with the help of complex algorithms. These sophisticated algorithms can actually analyze various markets and use that analysis to execute orders based on the conditions in the market. Traders having the highest execution speeds get more profitable than those having slower speeds. No wonder then, that a significant percentage of exchange volume can be pointed to high frequency trading (HFT) orders.
Rise of HFT
The popularity of high frequency trading increased when stock exchanges started providing incentives to companies to make them infuse liquidity to the market, for adding liquidity and competition to the existing quotes. For each transaction the exchange provides a rebate to the firm providing the liquidity, which leads to significant profits for the company and provides greater motivation for high frequency trading.
HFT Helps Investors Save
While investors and experts may have divided opinions regarding the dependence on high frequency trading, HFT companies have actually helped investors find trading partners fast for something costing a fraction of what it would take for manual intermediaries. HFT has also helped investors gain hundreds of millions of dollars each year through savings thanks to the resultant lower trading costs. For investors, that means money in their portfolio growing over time. The efficiencies brought about by HFT are clearly benefiting small investors.
One of the other areas technology has advanced in trading is in online trading. Online broker dealers such as TradeZero now make it possible for new traders to learn the job and have a fuller understanding of the stock market through a user-friendly platform. And, commission-free trading makes it ideal for new traders to maximize their earnings. Get in touch with us at 954-944-3885 or email firstname.lastname@example.org.
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