Trading Frequency

Trading frequency refers to how often a trader executes orders within a given strategy. High-frequency trading involves thousands of transactions per second, whereas lower-frequency strategies may only trade daily or weekly.

In the context of neutral strategies, higher frequency is often required to maintain tight delta neutrality and capture small price inefficiencies. However, increased frequency also leads to higher transaction costs, which can erode the profits of the strategy.

Finding the optimal balance between rebalancing frequency and cost is a primary objective for algorithmic traders. The technological infrastructure of the exchange and the trader’s own systems determine the limits of trading frequency.