| Category | Reaction Speed | Average Trade Duration |
| Very Low-Frequency | up to several hours | 1 week or more |
| Low-Frequency | up to a few minutes | 1 day to 1 week |
| Medium-Frequency | up to a few seconds | 10 minutes to 1 day |
| High-Frequency | 100 milliseconds or less | 1 second to 10 minutes |
| Very High-Frequency | 1 millisecond or less | 1 second or less |
This categorization is based on average trade duration. There is no need to explicitly categorize based on reaction speed, because average trade-duration typically governs the requirement for reaction speed. As a general rule, the shorter the duration of the trade, the more accurate the timing has to be in order to overcome transaction costs. So, for example, it is not possible (unless you want to lose lots of money) to have an algorithm with an average trade duration of 1 second that reacts to market data with a latency of 1 minute. (Note that this is just one possible categorization - to my knowledge there is no official version of this.)
Costs required for infrastructure increase dramatically as you go down the rows in this table. An individual without prior experience trying to get started as an algorithmic trader typically cannot go beyond the medium-frequency category in this table. High-frequency or very high-frequency algorithms require significant investment in infrastructure (co-located servers, expensive trading software, and at least one or two good programmers who can handle high-speed real-time systems, not to mention the time required to get all of this set up).