Difference between HFT and Quantitative Trading
High-Frequency Trading (HFT)
High-Frequency Trading (HFT) is a more specialised form of algorithmic trading that focuses on executing a massive number of orders at extremely high speeds. These orders can be traded at microseconds or nanoseconds speeds.
Quantitative Trading
Quantitative trading seeks to exploit market anomalies and cognitive biases in a systematic way. This is far less likely to be affected by competition, although is still heavily affected by regime shift. Quantitative trading does not have to be super fast, many successful quant funds hold positions for 6 months or more.
Difference between High-Frequency Trading and Quantitative Trading
| Parameters | High-Frequency Trading (HFT) | Quantitative Trading |
|---|---|---|
| Scope | A specific, highly specialized type of quantitative trading. | A broader discipline of using models and data for trading. |
| Speed | Ultra-fast, focusing on microseconds. | It can range from microseconds to months. |
| Primary Goal | Profit from micro-price differences and market microstructure. | Identify and exploit patterns, trends, and anomalies. |
| Infrastructure | It requires significant investment in low-latency technology. | Less reliant on extreme speed, though still tech-heavy. |
| Time Horizon | Extremely short-term. | Varies significantly, from high-frequency to long-term. |