Yes. That's what it does. If you, as a human, try to trade like this, the computers will destroy you. That's why people shouldn't trade like computers and they should use their experience and judgment to guide them.
Market makers have always taken a small profit for providing liquidity. The HFT machines take a much smaller profit than the humans who used to do this by hand because, like in many many other places in the economy, computers are cheaper than humans.
It's the same sort of automation that we've seen in many many other places.
I'm speaking for the majority of people that can't afford racks of servers and custom-laid transatlantic fiberoptic lines. I'm speaking about typical americans that have their money in 401(k) accounts or maybe buy stocks from an online broker to try and fund their kids' college accounts.
These people are all being scraped, very slowly but very surely, by HFT. That's the point I'm making.
At least we all admit that the modern stock market has absolutely no connection to the economy or to the interests of long-term investing or capital building. It's just a very large and very legal casino.
I'm speaking for the majority of people that can't afford racks of servers and custom-laid transatlantic fiberoptic lines. I'm speaking about typical americans that have their money in 401(k) accounts or maybe buy stocks from an online broker to try and fund their kids' college accounts.
Barriers to entry. Cost of business, etc... It's really not a concern to people who actually understand HFT and trade in their own way despite. They generally really don't mind the added liquidity.
These people are all being scraped, very slowly but very surely, by HFT. That's the point I'm making.
Buy in at $40. Sell at $80. Where does the computer scrape money from the transactions? It doesn't. Like I said, you're only losing if you're trying to trade like a computer. It's like trying to out-robot a robot on an assembly line.
At least we all admit that the modern stock market has absolutely no connection to the economy or to the interests of long-term investing or capital building. It's just a very large and very legal casino.
I disagree to the first part, and I think the second bit is an oversimplification.
It obviously matters, or else people wouldn't be upset by HFT or claim that they're losing money to it. We also have to consider the fact that pretty much all money comes through the bond and stock markets at exchanges. The exchanges are price arbitration centers for the economy. Paying attention to them matters because the exchanges and what happens there matters.
A casino is a place you go to lose money. It's all games and the odds are stacked against you. Everything we do in life is a gamble. An exchange is a place for people to make informed decisions about the prices of goods and financial instruments. Everyone loses and wins some.
I do relate to the long-term investing/capital building. The central banks keep printing money which funnels into the bond and stock markets. This in turn signals an abundance of actual economic capital, which there isn't. With the communication that there is plenty of excess capital for the long term, we (and especially people dealing in finance) act as if it is the case and start consuming capital. Eventually, facts catch up and we get some sort of terrible economic downturn. As a result of the long-term economic irregularity, actors act for the short-term because the long term is just too undependable.
