Understanding the world of microsecond trading and what it means for individual investors
In today's fast-moving financial markets, some trades happen in microseconds — faster than the blink of an eye. This is the world of High-Frequency Trading (HFT).
But what does it really mean? And should retail traders care?
In this blog, we'll break down HFT in simple terms, how it works, who uses it, and what it means for individual traders like you.
High-Frequency Trading is a type of algorithmic trading that uses powerful computers to execute a large number of trades at extremely high speeds.
Imagine a computer programmed to:
All of this happens automatically, without human involvement.
If stock ABC is ₹100 on NSE and ₹100.10 on BSE, HFT systems may buy on NSE and sell on BSE — instantly — to make ₹0.10 profit per share.
Repeat this 10,000 times and the small profit becomes significant.
HFT is mainly used by:
Retail traders don't usually have access to such infrastructure.
One famous example: The 2010 Flash Crash, where the Dow Jones dropped nearly 1,000 points in minutes — partly due to HFT systems reacting to each other.
Not really — but you should be aware.
HFT operates on speed and volume. Retail traders operate on strategy and patience.
You can't compete with HFT in speed — but you don't need to.
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