What Is Trade frequency?

In trading strategies, a trade frequency is a metric telling how often the strategy makes a trade.

  • High frequency strategies can make several trades per minute

  • Mid frequency, intra day and breakout strategies can make several trades per day

  • Low frequency, more macroeconomics strategies, can make some trades per year

  • Buy and hold strategy makes only two trades: enter the position and then sell it later

The trading frequency does not need to be constant. The strategy can take more positions and trade differently in different market regimes, like bull and bear markets, depending on the volatility of the underlying market.

The higher the trading frequency is, more trading fees will occur. Strategies that make trades too often might not be profitable on high-free trading venues like some decentralised exchanges like Uniswap v2-compatibles.

Trades do not necessarily mean opening and closing the whole position: trades can also occur to adjust the position sizing and risk mitigation measurements.

See also

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