Investing

The Automated Stock Market: What Is High Frequency Trading?

High frequency trading: you’ve heard the term, but chances are you simply filed it in the back of your mind, somewhere after “arbitrage” and before “long/ short equity.” It’s investing lingo for millionaires and up, something that only those wealthy enough to invest in hedge funds should really bother to understand. It doesn’t really everyday people and their 401(k)s. Or does it? Technological advances that make high frequency trading possible have changed how stocks are traded so sweepingly that, if you participate in a pension fund or even a 401(k), how your own money is managed now (or in the future) may be affected by these changes. This interactive infographic offers a look at the basics of high frequency trading.