> For the complete documentation index, see [llms.txt](https://whitepaperfinance.gitbook.io/navaix-whitepaper/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://whitepaperfinance.gitbook.io/navaix-whitepaper/algorithmic-trading/high-frequency-trading-hft/advantages-and-disadvantages-of-hft.md).

# Advantages and Disadvantages of HFT

### Advantages <a href="#mntl-sc-block_1-0-21" id="mntl-sc-block_1-0-21"></a>

* The main benefit of high-frequency trading is the speed and ease with which transactions can be executed. Banks and other traders are able to execute a large volume of trades in a short period of time—usually within seconds.
* HFT has improved market liquidity and removed bid-ask spreads that would have previously been too small. This was tested by adding fees on HFT, which led bid-ask spreads to increase. One study assessed how Canadian bid-ask spreads changed when the government introduced fees on HFT. It found that market-wide bid-ask spreads increased by 13% and the retail spreads increased by 9%.

### Disadvantages <a href="#mntl-sc-block_1-0-26" id="mntl-sc-block_1-0-26"></a>

* It has replaced a number of broker-dealers and uses mathematical models and algorithms to make decisions, taking human decisions and interaction out of the equation.
* Allows large companies to profit at the expense of the little guys. Its so-called ghost liquidity is also a source of criticism: The liquidity provided by HFT is available to the market one second and gone the next, preventing traders from actually being able to trade this liquidity.