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.
Glossar
HFT Strategies
Technique ⎊ Trading methodologies that leverage ultra-low latency data feeds and rapid order execution capabilities to capitalize on fleeting price discrepancies in crypto markets, often involving options arbitrage or volatility harvesting.
Hft Firms
Algorithm ⎊ High-frequency trading firms leverage sophisticated algorithmic strategies to exploit fleeting market inefficiencies across cryptocurrency derivatives, options, and traditional financial instruments.
HFT
Velocity ⎊ This strategy relies on ultra-low latency infrastructure to execute a massive volume of orders in fractions of a second, capitalizing on minute price discrepancies.