Eighth-grader William Arnuk explains why high frequency trading sucks and is ripping you off.
Kid gets an A as far as I'm concerned. I may be a technocrat but I also believe in a level playing field, and this certainly the hell isn't level.
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Kid gets a C-, as far as I'm concerned. This is little more than screaming "booga booga look at the scary scary behavior of the market!" while shining a flashlight on the underside of his face.
He's got a future with Fox News, perhaps.
For instance, he implies that it is somehow "bad" that only people and groups with a lot of money can do high-frequency trading. This is true. But it is also true that, if high-frequency trading were to be banned, the average small investor would still be unable to compete against hedge funds and mutual funds and professional traders. I hate to break it to you, but your round lot of shares is a drop in the bucket to market volumes.
Also, he neglects to point out that a lot of these high-frequency trades show up in the "dark pools" and in the third market, where only institutional investors can play anyway. Or that high-frequency trading is specifically incentivised by the exchanges to ensure market liquidity.
Oh, and the flash crash. Yeah, that was bad. But it's hardly the first time that something like that has ever occurred in the markets. There's a reason that it hasn't been pinned on the HFTs - it doesn't require HFTs. The "circuit breaker" rule (Regulation SHO, rule 201) initially went into effect after Black Monday in 1987 caused the single largest 1 day drop in the market ever.
What caused it? A combination of stop orders and human psychology. People sell into a down market, pushing the market down, causing even more selling.
Smug little eighth-grade punk. Do some actual research, instead of cherry-picking for soundbytes that support your position.
He's in eighth grade, bro. Your average eighth grader these days has trouble spelling the word "frequency" right.
Besides, your valid points about HFT aren't making me like it more.
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