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What is High Frequency Trading?

High Frequency Trading is activity aimed at bombarding the market with high volumes of small orders in order to profit from small, often fleeting, price discrepancies in the prices quoted for single stocks (perhaps on multiple stock exchanges) or between pairs or groups of stocks. Indices may also be traded as derivatives. Some high frequency trading may also be aimed at detecting and profiting from the presence of large institutional orders whether they are undisclosed or disguised in algorithmic strategies. High frequency traders tend to be private proprietary traders, which has raised regulatory issues around monitoring and supervision.