Thomas L189 Morris

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How does high-frequency trading (HFT) affect forex liquidity?

HFT firms use algorithms to execute thousands of trades in milliseconds, arbitraging small price discrepancies. Institutions benefit from added liquidity, though critics argue HFT increases volatility. Retail traders indirectly interact with HFT through spreads and price efficiency. Benefits: tighter spreads and faster execution. Risks: flash crashes and predatory algorithms exploiting slower participants. HFT shows that technology dominates modern forex—speed and precision create advantages that reshape liquidity landscapes.