April 2011
Intermediate to advanced
176 pages
4h 4m
English
Chapter 9
Conclusion
The high frequency trader story is one of how the shift of power in a profitable business can create a firestorm of misunderstanding. As all the listed markets went electronic the process of buying and selling securities changed forever. There is no longer a human being creating the prices for others to trade upon. Some have made the transition to the new electronic marketplace and others have not. Those whose livelihood have changed dramatically and are negatively impacted by the change are the ones most likely to complain. Is the new market perfect? Far from it, but there will always been an inherit risk to investing. The idea that the stock market over the long haul will have guaranteed profits is a fallacy created by the industry itself. After serious research the regulators created a competitive marketplace in the equity market and they should stand by their decisions. Competition has lead to tighter spreads and cost of trading has decreased significantly. This is fact and just because the power has shifted to the high frequency liquidity providers does not mean there is a smoking gun of manipulation and fraud.
The majority of problems during the great recession were caused on the credit side where there are many suspects to blame. The listed markets actually performed extremely well during the crisis and in its aftermath. Of course naysayers will bring up May 6th, 2010 and this is a legitimate reaction to a day that will not be remembered in a positive ...
