'Real' investors eclipsed by fast trading (84% of trades are HFT!)

[Roland99]

http://www.ft.com/intl/cms/s/0/da5d033c-8e1c-11e1-bf8f-00144feab49a.html#axzz1t4qPww6r

Trading by “real” investors is taking up the smallest share of US stock market volumes [since Morgan Stanley started keeping track 10 years ago.]

The findings highlight how US trading activity is increasingly being fuelled by fast turnover of shares by independent firms and the market-making desks of brokerages, many using high-frequency trading engines. [actually all of the market-making desks are using it.]

***

The proportion of US trading activity represented by buy and sell orders from mutual funds, hedge funds, pensions and brokerages, referred to as “real money” or institutional investors, accounted for just 16 per cent of total market volume in the form of buying, and 13 per cent via selling in the final quarter of last year, according to analysis by Morgan Stanley’s Quantitative and Derivative Strategies group.

[DJ13]

1. Links to FT no longer work

They are now behind a pay wall for subscribers.

[Turbineguy]

2. The brokers

have made investors moot. The cannibals end up eating each other.

[Warpy]

3. Exactly why we need a transaction fee so desperately

HFT relies on thousands of trades a minute to shave tenths of points on or off stocks and seriously skews the market. With even a penny a trade transaction fee, these trades would become unprofitable quickly.

I want to see all those computers junked or turned over to NASA or the NIH and turned into useful data crunching.

[mbperrin]

4. THEN can I tie them to a tree?

Pleeze, pleeze, pleeze, purty please?

Not sure if I'm speaking satirically or not...

[OllieLotte]

5. What do I care?

I used to pay $25 a trade to Vanguard. They changed their policy roughly 6-7 years ago and now I pay $7 a trade. Guess what? It really doesn't matter much to me. I don't trade that frequently and if I pay a fraction of a cent more for a stock due to some HFT what do I care? A fraction of a cent? The important concept is whether the stock that I am buying a good stock. If I buy a good stock and hold on to it for a number of years, paying a fraction of a cent more isn't going to matter and neither is my transaction fee.

[eridani]

6. Bingo. +1000 n/t

[Roland99]

7. Imagine those computers running Folding@Home or something?

working to find a cure for cancer instead of supplying greedy institutions with more money?