What's stopping you from making lots of money by successfully predicting next year's stock price for Apple, IBM or Ford? Normal human investors can obviously keep doing normal human investment.
That was a not very helpful response to a fairly obvious question. HFT is taking advantage of arbitrage over a very short period of time (seconds). What effect does it have on long-term prices? If you hold stock for longer than 0.01 seconds (or 1-2 days in the case of a fat-fingered-algorithm), why should you care?
That wasn't my point. Countering HFT with "well you can still pick stocks the old-fashioned way!" is borderline moronic. Over 95% of trade volume is HFT; retail investors can't compete.
I think HFT is ridiculous and the epitome of capitalism. If you outlaw'd it, a new form of lightning fast arbitrage would arrive.
My point was that if you call apple increasing over the course of 1 year, you might double your money if you're lucky. It's much more likely that the HFT operators will outperform you, as they have over the past decade.
>My point was that if you call apple increasing over the course of 1 year, you might double your money if you're lucky. It's much more likely that the HFT operators will outperform you, as they have over the past decade.
These results don't seem related at all. You buy stock at price A and sell and price B (B = A+X, hopefully). What does it matter to you that other parties made money (perhaps more than X) while the stock was going to B? Institutional investors have always been more savvy about the market than retail ones. I don't see how them making money around the edges changes the calculus for "the rest of us."
