High-Frequency Trading and the Retail Investor

The recent debate about high-frequency trading that took place live on the floor of the NYSE was quite interesting. However, it seemed to paint high-frequency trading in a very negative light without presenting the other side of the argument. The two videos below from recent episodes of tastytrade LIVE provide great counterpoints to the negativity that is currently surrounding high-frequency trading. The first video also provides some incredible insights into how trades from retail investors are actually routed and executed after the trades are placed:

(Source: http://youtu.be/LTAJwtWoQg4)

This second video explains why high-frequency trading is important to retail investors like me and Scott:

(Source: http://youtu.be/e9aYZYSwCLo)

1 Response

  1. Scott says:

    Thanks for posting these, Johnny! And, thanks to tastytrade (and the HFT that allows it to be operated at no cost to the individual investor). (You’ll have to watch the first video to understand what I mean.) Tom Sosnoff does a great job explaining why high-frequency trading is actually very beneficial to the individual investor and how it creates the liquidity that allows the US to be the financial center of the world.

    In fact, in the second video Sosnoff brings up a quote that Michael Lewis (author of the book Flash Boys, which essentially started this whole discussion) said in his other book, Liar’s Poker: “Those who know don’t tell and those who tell don’t know.”

    Tom Sosnoff is saying that Lewis does not know or understand in this case and is doing a disservice to the retail investors like me, possibly setting back all the improvements and gains that HFT has given us.

    After watching these videos I’m not sure if I’ll be even asking for Lewis’ book for my birthday anymore! I’d hate to support an author who may be writing inflammatory things just to get book sales.

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