FX trading means Forex Trading is an over the counter exchange market where currencies are traded. It includes all the aspects of buying, selling, and exchanging of currencies at a certain price. Now, the market faces certain days where it touches different frequencies. When the market is at High Frequency, the share of the market is quite significant, High Frequency days add a big share of liquidity in the market making significant strategies. Making these strategies minimize the spread of buying and selling of prices making an increase in the depth market. Now, Low-Frequency Trades is completely opposite of High Frequency as it means that very few trades have taken place over the month it can happen as the trades are usually dependent upon the long term daily charts. They take more time to change but mostly end up giving results that return the investments.
Now, certain differences between High-frequency Trading and Low-Frequency FX Trading are stated below:
High-Frequency Trading
High-Frequency Trading is a type of algorithmic trading that has characteristics of high turnover, high speed, and high order trade ratios which results in high-frequency financial data and electronic tools. The key attributes which can be included in HFT can be Specific order types, Co-locations, complicated algorithms, Short term investments, and a high rate of cancellation of orders. It is thus mainly used in highly sophisticated technical tools and in computer algorithms to increase the trade securities quite fast. There is a saying that trading can be very addictive as gambling which can be true in the case of High-Frequency Trading. Statistics also say that High-Frequency traders show far less profit than the Low-Frequency Traders making it less preferable.
Low-Frequency Trading
Low-Frequency Trading involves the participation of a trader or investor who has a long term goal or opinion in Forex trading and holding the decision for about a long period of time. Thus, quite a small number of trade occurs in the trade cycle which is said to below. The time periods can at times last for over a month, year, and maybe more. Some basic strategies which are used in Low-Frequency Trading can be, Using of technical data or analysis which have a long period charts, Using such a forex pair which provides the most interest rate to the investor; this is usually known as carrying Trade and lastly, Macroeconomic and Geopolitical drives are also used in this particular trading. If you are a trader who does not want a high amount of stress, you should go for Low-Frequency Trading. Statistics also say that High-Frequency traders show far less profit than the Low-Frequency Traders making it preferable.
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