High-frequency trading: speed matters

The speed of computerized high-frequency traders can be measured in nanoseconds.

High-frequency trading (HFT) is when sophisticated computerized algorithms buy and sell stocks at speeds as fast as a nanosecond, hundreds of thousands of times a day.

Sal Arnuk is co-founder of Themis Trading. Every day, he and his guys trade millions of shares for pension funds, mutual funds and other firms that manage your money. For Sal, high-frequency traders are his worst enemy -- a faceless computer who can beat him to every trade.

Sal says these HFTs are responsible for about 70 percent of the volume on any given day of trading. Competing in the market with HFTs is nothing short of a cage match, and it requires quite a bit of bobbing, weaving, dodging and making sure we aren't feeding the engine of these robots all day long. Sal's weary that the impact of HFT is only growing, and he blames it for the historic levels of volatility in the markets these days. One day the market is down 200 points, the next it’s up 250. It's enough to give the average investor whiplash.

According to Sal, the game is just more and more rigged. Rigged enough that the individual invester should get out? He wouldn't go that far yet. Playing the market is vastly different than it was 10 years ago, and Sal thinks smaller investors just have to up their game and get more knowledgeable about how stocks are trading these days.

About the author

Heidi N. Moore is The Guardian's U.S. finance and economics editor. She was formerly the New York bureau chief and Wall Street correspondent for Marketplace.
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Please add a fee for cancelled orders. Would stop HF in its tracks and add revenue. The cost of HF is being born by retail in added cost of execution

Hey its an awesome one. Stock market changes every seconds and yup it would be a wise decision to increase the speed with it. However the investors will take their time to convince them self to adjust to this strategy.However its a great idea. But a risky one indeed.

Why do we not require all purchases to be held for 24 hours? I know I am being a bit simple minded, but strictly speaking it is dishonest to sell something you don’t have (never actually took possession of), and strictly speaking it is dishonest to accept money when you provided no goods or services, and an investment of 2 nano-seconds is not really an investment at all. I’m certain what I am suggesting will never come to pass (too many wealthy freeloaders would lose way too much money), but perhaps we should at least consider that there is a basic flaw in the way we run our financial markets.

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