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AI in High-Frequency Trading (HFT)
High-frequency trading (HFT) is an area where AI’s speed and precision offer substantial advantages. HFT strategies use AI to execute a large number of orders within fractions of a second, profiting from minuscule price differences.
Latency Arbitrage: AI can exploit differences in latency between markets, executing trades faster than competitors. In this strategy, AI algorithms detect and capitalize on price differences between markets before they are corrected.
Microscopic Price Movements: AI systems in HFT can detect price movements as small as a few cents and act on them immediately, making a large number of trades throughout the day to accumulate profits.