Time frame – High frequency timeframe
High frequency time frame is perhaps the most interesting for most of us.
High frequency trading only accounts for a small part of all traders. But they account for two thirds of all stock market transaction. The strategy is simple. To trade as much as possible and quickly as possible. The profit on each transaction is razor thin. They probably expect to earn a fraction of a penny on each trade. But due to the number of times they trade, these little pennies can slowly add up to a significant sum.
So how does high frequency trading work? There are several ways high frequency trading work and they all rely on having fast access to the stock exchange servers. That’s why high frequency trading computers need to be located as closed to the stock exchange server as possible to have as much of an edge as possible.