Currency at the Speed of Light: Suitability of the Foreign Exchange Market for High-Frequency Trading

Abstract

High-frequency trading has undergone momentous evolution within the past decade, to the point to where it now accounts for a major percentage of global exchange traded securities. However, its application to the global foreign exchange market has been relatively limited. Correspondingly, the amount of literary review and research on the topic has been similarly inadequate. This article examines the characteristics and determinants that contribute to the particular suitability of the foreign exchange market for high-frequency trading. This examination suggests that a new paradigm has evolved within the foreign exchange market—one that is highly apposite for high-frequency trading strategies.