HFT (High Frequency Trading) Effects on Investors

5. A Lack of Investor Confidence

The use of high frequency trading within well-established exchanges worldwide causes a significant decline in overall investor confidence. Without a degree of trust in the market and its efficiency, pricing, and fairness, investors have a tendency to run in the other direction. Individuals pull back on the amount of money they set aside in mutual funds and pension plans, causing a slow decline of value in the broad markets. A lack of investor confidence rarely bodes well for generating a return for either the short or long term.