High-Frequency-Trading Technologies and Their Implications for Electronic Securities Trading
  • Peter Gomber
  • Martin Haferkorn

Delineation and Market Relevance of High-Frequency-Trading

High-Frequency-Trading (HFT) has become quite prominent in public and academia after the May 6th, 2010 “Flash Crash” and in the context of the recent financial crisis. However, the public discussion is mostly based on generalizations instead of a well founded research-based point of view, and the terminology of electronic trading is often used indiscriminately. Literature defines HFT as a subset of Algorithmic Trading. Therefore, and to foster the understanding of these terms, we first describe Algorithmic Trading. Based on this definition we will then specify HFT.

Algorithmic Trading in the broadest sense is the generation and submission of buy and sell orders by an algorithm (Prix et al. 2007, p. 1). An algorithm in this context is defined as a set of instructions which processes market data in real-time and submits orders to a single or multiple market places without human intervention. Narrow definitions require the...


Trading Strategy Circuit Breaker Order Book Electronic Market Market Quality 
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Copyright information

© Springer Fachmedien Wiesbaden 2013

Authors and Affiliations

  1. 1.Chair of e-Finance, E-Finance Lab, Faculty of Economics and Business AdministrationGoethe University of Frankfurt am MainFrankfurt am MainGermany

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