There is a third explanation - barriers to entry have come way down, so lots of amateurs have gotten into the business. Some of these amateurs are now talking about it.
It is my understanding that High-frequency trading takes advantage of milliseconds (or less) of latency and extreme closeness to the markets network-wise, and exploits that advantage to the trader's benefit.
It's a subset of algorithmic trading, and one that's contentious and starting to be widely considered an unfair market practice, as it leverages the actual mechanism of the market itself rather than just the market.
Are we really talking about HFT here or just algorithmic trading?
There is no clear dividing line between HFT and algorithmic trading.
Some amateurs do latency arbitrage proper, though that is more the province of big shops. Some are very short term (500ms-1000 second time horizon) speculators. Some do a combination of both - use HFT techniques to shave off pennies on longer duration positions.
It is my understanding that High-frequency trading takes advantage of milliseconds (or less) of latency and extreme closeness to the markets network-wise, and exploits that advantage to the trader's benefit.
It's a subset of algorithmic trading, and one that's contentious and starting to be widely considered an unfair market practice, as it leverages the actual mechanism of the market itself rather than just the market.
Are we really talking about HFT here or just algorithmic trading?