In What Way Does a High-Frequency Trading (HFT) Environment Affect Slippage?

HFT firms contribute to a very high volume of transactions, which generally increases market liquidity and tightens the bid-offer spread. A tighter spread typically reduces the potential for large slippage.

However, HFT strategies can also rapidly pull liquidity during high volatility, leading to sudden, sharp increases in slippage for slower retail traders.