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High frequency trading

A highly sophisticated form of electronic trading using powerful computers which trade huge volumes of small chunks of securities within a fraction of a second. High frequency trading uses algorithms to analyse and react to specific market conditions, holding positions in equities, options, futures, ETFs and currencies for very short periods of time to profit from split second market trading opportunities. High frequency trading is used by proprietary firms or the proprietary desks of banks.

This definition is for general information purposes only