High-Frequency Trading (HFT) represents a revolutionary shift in financial markets, utilizing complex algorithms and cutting-edge technologies to execute market trades at extremely high speeds. HFT firms rely on sophisticated strategies to capitalize on market inefficiencies, small price discrepancies, and short-term trends. This approach has shifted the landscape of trading, increasing market liquidity and efficiency while also introducing regulatory and ethical concerns.
This report explores key aspects of HFT by analyzing its core algorithms and strategies, such as statistical arbitrage, market making and momentum ignition, highlighting their impact on modern trading. In addition, the challenges of implementing HFT systems will be discussed, including hardware requirements, infrastructure costs and security risks. Lastly, we will consider the regulatory and ethical implications surrounding HFT and its role in shaping global financial markets.