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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.

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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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Mr. Pearce's picture
Mr. Pearce - May 21, 2012

What a bummer of a story. Shallow person writes touching story about becoming just a hair less so. Totally not up to MP standards.

en_b's picture
en_b - May 21, 2012

I made an account on marketplace just to say how offensive and obviously ignorant you are Mr Laurer.

mayorkl's picture
mayorkl - May 21, 2012

Those are some solid and well thought out points you make there, spelling champ! See? We can all make dickish comments on message boards!

catpanavan's picture
catpanavan - May 21, 2012

The bit of advice Mr. Lauer plans to give his daughter strikes me as about the last thing one should say to a child. While it is inspirational and encouraging it in no way prepares one for the realities and difficulties life presents in times good and bad. Learning from his own example, I would suggest he advise something along the lines of, "No matter what, get a couple of marketable degrees in high-paying fields, make a bunch of money, and start a retirement plan. And if your job makes you feel like a leech, quit and follow your passion as long as it offers good health insurance."

doctor.coolpop's picture
doctor.coolpop - May 21, 2012

So let me get this straight. Mr. Lauer made millions exploiting a technical loophole in the trading system, that is, by hacking the market for his sole benefit. Then he felt bad about it. He didn't give the money back, rather he took the proceeds and started a nicer company.

Isn't this called money laundering?

Sy's picture
Sy - May 21, 2012

hey doc, he didn't hack anything. He created a winning system, in trading its fair game. Also, how would he return the money? lose it back to some other sharks?

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