If you’re ready to get into high-frequency trading, you’ll need the high-frequency trading software that can potentially give you the returns you seek. High-frequency trading (HFT) has exploded in recent years with new online trading platforms providing retail traders access to a type of trading that’s mostly done by institutions.
Retail traders face challenges because HFT is capital-intensive and requires high technical skills. This look at the best high-frequency trading software can help you decide whether HFT might work for you.
Quick Look: Best High-Frequency Trading Software
- Best for Active Forex Traders of All Experience Levels: Forex.com
- Best for Professional Investors and Day Traders: Interactive Brokers
- Best for Low Trading Costs and High Leverage: Tickmill
- Best for Short-Term Trading Strategies: FxPro
- Best for Educational Resources and Customer Support: XM Group
Best High-Frequency Trading Software
High-frequency trading software allows you to leverage algorithms and a low-latency computing network to take advantage of short-term trading opportunities. If you’re looking to maximize your trading efficiency and profits, the software you choose could be a game changer for you.
Best for Active Forex Traders of All Experience Levels: FOREX.com
- Best For:Earning Cashback on TradesVIEW PROS & CONS:securely through Forex.com's website
Founded by Gain Capital in 2004, FOREX.com is a global forex trading broker headquartered in New Jersey. It is a subsidiary of StoneX Group Inc., a NASDAQ-listed company that acquired Gain Capital in 2020.
FOREX.com is regulated by the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) as well as securities regulators in Australia, Canada, Japan, the U.K. and Singapore.
Why We Picked It: FOREX.com offers the MetaTrader platforms that allow you to build algorithms. It also provides fast trade execution, charting tools, news, proprietary research and education.
Best for Professional Investors and Day Traders: Interactive Brokers
- Best For:Active and Global TradersVIEW PROS & CONS:Securely through Interactive Brokers’ website
Headquartered in Greenwich, Connecticut, Interactive Brokers is a global brokerage offering 24/7 trading in commodities, foreign exchange and securities in more than 150 markets in 28 currencies. Interactive Brokers is a subsidiary of IBG LLC, founded by Thomas Peterffy, an early innovator in computer-assisted trading.
Interactive Brokers is regulated by the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), the CFTC and other regulatory groups.
Why We Picked It: Interactive Brokers is known for its low fees and global reach. The brokerage offers access to a variety of financial instruments: stocks, bonds, exchange-traded funds (ETFs), mutual funds, options, futures and currencies. Interactive Brokers offers direct access to markets and clearing services, and it offers investors tools to manage their portfolios.
Best for Low Trading Costs and High Leverage: Tickmill
- Best For:Low Deposit RequirementVIEW PROS & CONS:securely through Tickmill Forex's website
Tickmill is a financial derivatives broker based in the Seychelles. It is owned by Tickmill Ltd., which belongs to the London-based Tickmill Group. Illimar Mattus, Ingmar Mattus and Nikolai Nikolajenko founded the Tickmill Group in 2014.
Tickmill, the brokerage, is regulated by the Seychelles Financial Services Authority (FSA) and is authorized by the U.K. Financial Conduct Authority (FCA). It is also regulated to operate in Cyprus, Dubai and South Africa.
Why We Picked It: Tickmill offers the MetaTrader 4 (MT4) and MetaTrader 5 (MT5) trading platforms and its proprietary platform, Tickmill Trader. You can trade stocks, bonds, ETFs, commodities, futures, options, foreign exchange (forex), stock indices and cryptocurrencies. The site also features economic calendars, forex calculators and more.
Best for Short-Term Trading Strategies: FxPro
Established in 1999, FxPro is a foreign exchange broker that was incorporated as a limited company in 2002. Denis Sukhotin is the controller of the London-headquartered company. FxPro has offices in Cyprus, Monaco and The Bahamas. The FCA regulates FxPro in the U.K. The company’s other offices are under the authority of the Financial Conduct Sector Authority (FCSA) of South Africa and the Securities Commission of The Bahamas.
Why We Picked It: FxPro offers the popular forex trading platforms MT4, MT5 and cTrader. It also has a proprietary platform for clients. You can trade over 2,100 contracts for difference (CFDs) on forex, stocks, futures, cryptocurrencies and more. The platform has several options for algorithm trading and offers technical indicators, chart patterns and trend lines for traders.
Best for Educational Resources and Customer Support: XM Group
The XM Group is owned by Trading Point Holdings Ltd., a financial services company headquartered in Cyprus. Trading Point Holdings was founded by Constantinos Cleanthous in 2009. XM is regulated by the Cyprus Securities and Exchange Commission (CySEC), the Australian Securities and Investments Commission (ASIC) and the International Financial Services Commission (IFSC) of Belize.
Why We Picked It: XM Group offers trading in 57 currency pairs, stocks and CFDs for stocks, stock indices and commodities. The company offers traders the MT4 and MT5 trading platforms alongside its mobile app.
What Is High-Frequency Trading?
High-frequency trading is a strategy that uses complex algorithms – sophisticated computer code – and advanced computing networks to analyze markets, identify opportunities to profit and execute trades at lightning-fast speeds. It is a subset of algorithmic trading, which uses predetermined coded instructions on price, time and volume to automatically send orders to a market or exchange.
High volume and high frequency are at the heart of the high-frequency trading strategy. An enormous amount of data is analyzed, and trades are executed in milliseconds and microseconds. High-frequency trading has these characteristics:
- Speed: Execute trades in fractions of a second
- High-volume trading: Process large numbers of orders
- Short holding times: Sometimes held less than a second
- Use of algorithms: Analyze mountains of data
- Colocation: Place equipment near exchanges
Using the strategy to trade stocks requires highly developed algorithms, advanced computing systems and networks. The technical skills and capital needed to build such an advanced computing ecosystem typically fall outside the realm of a retail trader, leaving the strategy to HFT firms used by large banks and hedge funds.
High-frequency trading software has brought beneficial changes to traders and financial institutions. Those favoring high-frequency trading argue that HFT brings liquidity to markets because there is always someone there to buy what you’re selling. They also say HFT brings down costs because the gap between the bid and ask price narrows as liquidity increases.
HFT trading is legal in many global markets. However, the SEC and the Federal Bureau of Investigation (FBI) have scrutinized some HFT firms' practices, and some European countries are debating whether to ban the strategy.
Pros and Cons of High-Frequency Trading
So, what are the benefits and disadvantages of high-frequency stock trading? Here are the pros and cons.
Pros
- Speed
- Liquidity
- Reduced trading cost
- Arbitrage opportunities
- Profit potential
Cons
- Market volatility
- Unequal access
- Flash crashes
Consider Which High-Frequency Trading Software to Use
High-frequency trading requires technical skills and deep capital resources. If you’re ready to begin HFT trading, you now know some of the best high-frequency trading software to choose from.
Frequently Asked Questions
Is high-frequency trading still profitable?
High-frequency traders can make profits by using tried-and-true trading strategies and optimizing the speed of trades to take advantage of opportunities. However, this success has drawn more players into trading at higher volumes and frequencies, creating competition and lowering profits.
Is high-frequency trading illegal?
High-frequency trading is not illegal in many countries, but some of the practices of high-frequency traders – front-running, layering and spoofing – are illegal. Some European countries debate banning high-frequency trading, and some market players complain that HFT creates “ghost liquidity” that is gone in seconds, with profits made by large institutions at the expense of smaller ones.
What is high-frequency trading software?
High-frequency trading software is a platform that uses algorithms to analyze markets and execute trades within milliseconds or microseconds. High-frequency trading software allows you to take advantage of price discrepancies between markets and small market movements to potentially earn profits.
Get a Forex Pro on Your Side
FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets with low pricing and spreads, fast, quality execution on every trade.
You can also tap into:
- EUR/USD as low as 0.0 with fixed $7 commissions per 100,000
- Powerful, purpose-built currency trading platforms like MT4, MT5, TradingView and NinjaTrader
- Monthly cash rebates with FOREX.com’s Active Trader Program
Learn more about FOREX.com powerful trading platform and how you can get started today.
About Sarah Edwards
Sarah Edwards is a finance writer passionate about helping people learn more about what’s needed to achieve their financial goals. She has nearly a decade of writing experience focused on budgeting, investment strategies, retirement and industry trends. Her work has been published on NerdWallet and FinImpact.