Decentralised exchanges (DEXs) cemented their place in the ecosystems of cryptocurrencies and finance after the decentralised finance (DeFi) boom of 2020, as reported by Cointelegraph.
Users are free to list any cryptocurrency they wish on DEXs because they are less tightly controlled than centralised exchanges. High-frequency traders can trade coins using DEXs before they are listed on significant exchanges. Decentralised exchanges are also noncustodial, which theoretically prevents exit fraud by authors.
As per Cointelegraph, High-frequency trading (HFT) is a type of trading where quick deals are made after thorough data analysis using sophisticated algorithms. HFT can therefore analyse several marketplaces and quickly complete a large number of orders. Fast execution is frequently essential for success in the trading world.
Small bid-ask spreads are eliminated by HFT through rapid execution of huge volumes of deals. Additionally, it enables market participants to profit from price movements prior to their complete reflection in the order book. HFT can therefore make money even in volatile or illiquid markets. HFT continuously and quickly analyses all cryptocurrencies across several exchanges using complex algorithms. HFT algorithms have a major advantage over human traders due to how quickly they function. They are incredibly adaptable and can trade across various asset classes and multiple exchanges at once.
Cointelegraph noted, HFT algorithms are designed to identify trading triggers and trends that are difficult for the unaided eye to see, especially at the speeds needed to open numerous positions at once. Being the first to act when a new trend is discovered by the algorithm is the ultimate goal of HFT.
(With insights from Cointelegraph)
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