High frequency trading on Wall Street- and why it should worry us all

On the average day on Wall Street these days, more trades are executed than the sum total of trades in 1960. Sure, technology has made trading easier- but, as far as I know- the rules of investing haven’t changed that much.

Investing is supposed to be how you make money on Wall Street- that’s why our pensions, our insurance, and our monetary system are centered on the markets.

However, the people who run Wall Street and spend a lot of money buying politicians have transformed what was once an honest and honorable business into a high stakes casino, with our collective wealth as their play-toy.

We knew about “programmed trading” where computers were moving large amounts of stock in order to take advantage of the price fluctuations that moved with the large trades, and now- the new opiate of the powerful comes to light- “high frequency trading;”

High-frequency trading. Lots of buying and selling in micro-seconds. Speculation is that’s one of the reasons Goldman Sachs posted such out-of-this world profits last quarter… there’s no question the use of super-fast computers to make trades has been on the rise….

High frequency traders use computer programs to buy and sell stock extremely quickly. They can send out thousands of orders in the blink of an eye. It means there’s almost always someone to trade with if you want to buy or sell a stock….

Jamie Selway is managing director of White Cap Trading…

Selway doesn’t think high speed traders are that toxic. But critics say the firms are notoriously secretive. And their lightning fast trades can leave slower investors…like maybe your mutual fund provider…out in the cold.

Analysts say high frequency firms represent anywhere from 40 to 70 percent of trading on a given day.

via Is high-frequency trading fair and safe? | Marketplace From American Public Media.

Trading at this speed takes rational business value evaluation totally out of the picture. We no longer need to look at P&Ls or balance sheets- it’s all about manipulating markets and realizing profit from playing with paper. Paper just like playing cards at a poker table. The transformation from financial tool to casino game is almost complete- except they are really playing with your assets, not their own. How do you feel about that?

While we’ve been given every dog and pony show about what got us in this financial mess, the reality is- it’s all smoke and mirrors to distract us from the grandest theft of all time. Trillions of dollars have “disappeared” as the markets have disintegrated, yet, the people with the loot at the top, still have loot- and are now paying themselves bonuses with your tax dollars after we bailed them out.

Why do I continue to write about this on a site that is mostly read by local readers? The same games that are played by the big boys on Wall Street, are being played in backrooms here in Dayton, Ohio. The attempt to quickly raise the hotel tax by the County Commission to build an ice arena we didn’t know we needed for a team that didn’t exist? The influence of the political parties, special interest groups, labor, political action committees on local campaigns has been making sure that the people in power, stay in power- as long as the hands that feed them their campaign chest keep getting elected so they can continue to play with your money for their supporters’ benefit.

It’s time for a rational rethinking of how we evaluate campaign finance and our election process. It’s time to wake up and see that to follow the votes, one only has to follow the money.

It’s time to take the money out of politics before we don’t have any money left.

I’ve seen enough people worried about “socialism” – yet, those people haven’t even a clue. It’s the return of a monarchy we should be fearing. The people with money controlling and squeezing those without.

Until we see mandates on the market that force a return to investment instead of gambling (forcing the holding of stock for at least a year) we all are at deep risk of seeing our economic rebound- bouncing back at us, with another clean picking of our wallets as the new kings laugh their way off into the sunset.

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