High-frequency trading: Bad for markets... and the soul?

A trader takes a break work on the floor of the New York Stock Exchange in New York City. Commentator Dave Lauer worked in high-frequency trading until he had a crisis of conscience.

Like many people in this country, I grew up in a world that equated success with money. I read Ayn Rand and subscribed to her idea that your worth to society is perfectly measured by the amount of money you earn. I followed the path of least resistance and with degrees in computer science and finance, I wound up in high-frequency trading in 2009.

I thought I was happy. While the economy was falling apart, I was getting rich and so was everyone around me. Then last spring, the test came back positive -- my wife was pregnant. Suddenly I found myself thinking how I would explain my job to my future daughter. What exactly did I do to make so much money? What exactly was I doing to add value to the world? After two years in high-frequency trading, I could see how little value it actually created. And I saw first-hand it was nowhere near enough to offset the damage it wrought -- where computers create whipsaw volatility and fortunes are made and lost in milliseconds.

I knew in my heart that I was nothing more than a leech, regardless of how impressive my trading algorithms were. The brain drain that sucked so many smart and talented people away from noble pursuits and into financial services to earn their fortunes made me question the very foundation of my economic assumptions. I decided to leave the industry and find a new path. My passion for start-ups had been with me my whole life. I found myself craving the challenge of creating something new and the rush of excitement when something you've built resonates with other people. I knew it would be difficult to quit my job in a terrible economic environment, start a new company, and have my first child. But in my heart I knew it was what I wanted. When my daughter was old enough, I wanted be proud to tell her what I've done, and even prouder to tell her that no matter what, she must follow her passion in life like her father did.

About the author

Dave Lauer is a founding partner of the story-telling website Cowbird.
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He got rich trading, got out at the right time, used the profit to create a new company, and promoted it well. What can i say? Being smart pays.

I wonder where all these negative comments come from. Perhaps they belong to people who do not want to face the realities that high frequency trading does not have any meaningful impact on others. Mr. Lauer was brave enough to face these realities head on and make a positive change in his life and his family's life. If any of you bother to look at cowbird.com you'll see that he has helped create something very meaningful and is giving back to his community. I don't get why people want to attack him for doing something that takes great courage. Perhaps it is because these same people have none.

It's fascinating that none of the negative comments have mentioned that high frequency trading is clearly bad, which was right up there in the title. So far we've had the 'no true Objectivist' gambit and a bunch of people who have found some moral reasons to ignore an opinion that they don't like.

Sorry fellas, there's pretty much no way around it: High Frequency Trading is bad for the economy and indicative of a systemic failure in the capital is managed in modern capitalism.

Boy -- this author may have read Ayn Rand, but he really didn't "get" Ayn Rand. Her entire screed (Atlas Shrugged) was about providing VALUE to the world. In her books, the bad guys are the money guys -- the heroes made real things: they operated trains, built buildings, mined for ore, even logged. The people who simply "traded" were considered the worst of the worst -- on a level with BAD politicians.
Glad the moral compass was reset -- but Ayn Rand was about rewarding production, not rewarding people who don't understand what makes a society actually function.

Calm down, everybody. Quants aren't noted for their depth of character and social conscience. They are geeks into money and can be very dangerous people, e.g., the Zuckerbergs of the world. Mr. Lauer apparently outgrew that. Rather than get all snippy about his ethical failings, why don't you stop to consider what a black swan event this is? How many traders have you heard about that saw the light, blamed themselves, and repented? Yeah, he kept his ill-gotten gains, but how much would you give back? Now he's trying to have a more meaningful existence, albeit in a pretty self-involved way. Even if by your lights he's not been sufficiently penitent, by dissing him do you really want to inhibit other sinners from eschewing the root of all evil just so you can wear your dubious moral authority on your sleeve? We need more Dave Lauers, not fewer of them.

It's not about giving up money or the pursuit of it. It's not like this guy said he was moving to a commune. It IS about a more noble pursuit of money. And it's about what the prospects of a family can do to ones priorities, even the most narcissistic and gluttonous of us.

I couldn't believe how this "moral lesson" played out when I heard it on NPR today. Make your millions through unethical means. Get out once you've got yours and the market slows down. Use your stash to start a new business and then go on NPR with what is made to sound like a feel good story to help promote your new venture to millions of listeners. Brilliant! Tomorrow on Marketplace, former cocaine dealer who is now a proud brewery owner and living the American Dream selling a legal drug.

I'm sure your holier than thou attitude plays well with the coffee house set. Here you just sound bitter.

Since Mr. Lauer didn't mention any philanthropic activities in which he engaged as restitution, I presume he simply took the money and ran.

Your presumptions are apropos to nothing. Maybe he gave thousands to charity every year. Would that have made the story better somehow?


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