HFT (High Frequency Trading) Effects on Investors

2. Missing Money

Because the majority of individual investors, or retail investors as they are called in the trading world, buy into the stock market through pooled funds, the glaring effects of high frequency trading are minimal. However, mutual funds and pension funds are part of the group of investors that trade after the HFT group, meaning prices can be manipulated in the short gap in time before pooled investments place orders. That short gap does not create an apparent change in trade price, but the minuscule difference in price every time HFT traders beat them to the punch creates the potential for lost money in the individual investor’s hand.