HFT (High Frequency Trading) Effects on Investors

1. Market Stability

Some argue that high frequency trading affects the overall stability of the stock market which in turn has an impact on retail investors. The market is complicated as it stands without the use of high frequency trading. Adding HFT back into the mix means that the potential for a market upset is higher than it normally would be. For example, the “flash crash” of 2010 which caused the price of some highly-traded stocks to fall below zero, albeit momentarily, caused a rush out of the market. When this takes place, individual investors suffer.