4 ms·

http://www.investopedia.com/articles/markets/012716/four-big-risks-algorithmic-highfrequency-trading.asp http://www.investopedia.com/articles/markets/012716/fou

• dsacco 9y ago
  That article has two reasons, though it spreads "amplification" out among several factors. In fairness, I do agree with the problem of flash crashes, whether they are caused by algorithms moving too quickly or too similarly. I'll contest the "confidence in the market" hypothesis, however. As more investors move to index funds, I don't believe "confidence" as defined would have any significant impact by increasing or decreasing, because fewer participants overall will be actively engaged.
  • ghostbrainalpha 9y ago
    That's a good point about index funding. I do think if confidence in the market gets low enough it is possible that people will stop investing all together or invest less than they would have. But that is me sidestepping the issue a bit.