They use stuff like divergence from VWAP, 25 delta RR, vol indices, basis spreads, stat arb, rate risk, fx risk etc. There are countless algos and bots that are trying to front run ticks and filled volume/prices. Many of them are co-located to the relevant data center, eg. Aurora and Mahwah.
Yes, the interval is a highly relevant parameter in algorithmic trading. It determines the frequency at which your trading algorithm evaluates market data and makes decisions.
Thanks for the answer. The question was wrong. What I wanted to know is whether HFT trading bases its analysis on intervals or only on realtime volume flow?
What are intervals? Usually it's pseudo market making, or lifting offers hitting bids, lead lag, relative value, or something unique to an exchange or data feed.
I understand the question but I don't think it makes sense to say one way or the other. I am sure some use a time based axis and some do not. While I usually use a time based axis, I don't think it is really that important if the interval is equally spaced. It is just a type of sequence if the index can be represented by an integer. The main implication with time being the ordering matters and the sequence is only moving in one direction.
Algorithms react to signals. The way you classify your inputs and outputs is up to you. Normally they follow indicators. Meaning that you can build your own indicators based on whichever parameters you wish and act on its signals.