High Frequency Trading (HFT)
High frequency trading is an automated trading system, used by large investment banks, hedge funds and institutional investors, utilising powerful computers to transact a large number of orders at extremely high speeds. These high frequency trading platforms allow traders to execute millions of orders, scan multiple markets and exchanges in a matter of seconds, thus providing financial institutions a huge advantage in the open market.
HFT uses complex algorithms to analyse the markets and are able to spot emerging trends in a fraction of a second. Essentially anticipating and beating trends to the market place, institutions that implement high frequency trading can gain favourable returns on trades they make by essence of their bid-ask spread, resulting in significant profits.
High frequency trading became commonplace in the markets, following the incentives offered to institutions by the exchanges in order to add liquidity to the markets. By providing incentives to these market makers, the liquidity in the market has increased, and consequently, the profits that the institutions see in every trade they make, over their positive spreads. Although the amount of spreads and incentives is a fraction of 1 cent per transaction, multiplying numerous transactions per day, amounts to large profits for high frequency traders.
At the same time, one must take into account that trading is based on exchange rates, which can be influenced by a variety of factors such as politics, various economic factors and more. These factors, which can generate high volatility in exchange rates, may generate large profits on the one hand, and on the other, significant losses for investors.
To minimise losses, many investors use strategies that allow trading through technical analysis. Technical analysis looks at how historical exchange rates can impact future exchange rates, and in some cases, certain patterns can predict future price movements. Using specialised algorithms and computer programs, can also be used to forecast the direction of a currency movement.
Since trading execution speed is limited by the speed of light, many programmers and investors are trying to reduce the amount of time required. Therefore, many HFT programs are usually installed in specialised data centres located near exchanges.
arcacap has developed a unique cutting-edge technology that best utilises the advantages of HFT. The technology is based on the fact that all digital transactions can be monitored and analysed. The algorithmic software built, uses Mega Computers and a team of experts and analysts to help users build their trading strategy. Over the years, we have been able to perfect our technology and give users access to HFT, by using our Managed Accounts and PAMM Accounts, and assist them gain significant profits.