High-frequency trading, or HFT, is a type of trading in which computers transact a large number of orders in fractions of a second. This occurs with powerful computer programs using algorithms to analyze multiple markets and execute orders based on market conditions. Artificial Intelligence refers to the simulation of human intelligence by software-coded heuristics. In other words, computers learn the patterns that humans use to engage in trading.

Until lately, HFT has been primarily used for arbitrage opportunities. However, AI is making HFT possible for others. Businesses need software-coded heuristics to create their own algorithms, and then they can trade.

In your initial post, discuss your thoughts on the future of this technology. Address the following questions:

• Are large companies that can afford this technology advantaged too highly over individual investors?
• Could this cause unnecessarily large market fluctuations as AI programs buy and sell huge quantities on what may otherwise be minor market forces?
• In what ways should this kind of trading be regulated?

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The future of highfrequency trading HFT and the integration of artificial intelligence AI into this domain presents both opportunities and challenges ... View the full answer