Abstract
Abstract: High-frequency trading (HFT) uses advanced technologies and sophisticated algorithms to make transactions at unprecedented speeds, which could significantly impact modern financial markets. This literature review examines the technological foundations, primary trading strategies, market impacts, regulatory environment, risk management practices, and future research directions in HFT. The findings reveal that HFT could increase market liquidity and price discovery but also increase volatility during periods of high market stress. Regulatory frameworks such as the SECs Market Access Rule and MiFID II aim to monitor and control HFT activities, at the same time effective risk management practices are crucial for maintaining market stability. Future research should focus on emerging technologies such as AI, ML, quantum computing, and blockchain, along with a better understanding of market structure and global regulatory coordination. This review provides valuable insights for market participants, regulators and researchers, contributing to a balanced perspective on HFTs role in contemporary financial markets.
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