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There's a difference between retail trader and retail investor. If Joe Schmo is a trader, looking to earn profits in the short term (days, weeks, < 6 months), t
by mayukh 14y ago
There's a difference between retail trader and retail investor. If Joe Schmo is a trader, looking to earn profits in the short term (days, weeks, < 6 months), the odds are heavily stacked again him, with HFT (i am kinda in agreement with Cuban there). If Joe was an investor, seeking out good companies and buying stocks with the intent to hold on to them for the long term (1 yr+) then HFT should have lesser impact. Ofcourse an investor could have made the wrong call, but then the outcome of a stock moving up or down over the long run should be related to the actual performance of the company in the real world, not some alternate universe dominated by hft algos seeking arbitrage opportunities.
- bearmf 14y agoHFT happens on millisecond scale. That is what they mean by "short term" now. If you are going to hold a stock for weeks it will probably not affect you at all. Even if your holding period is several hours you are not really competing with HFT.
- JumpCrisscross 14y agoIndividual investors outperform the market over a 20 day holding period and that "these patterns are consistent with the idea that risk-averse individuals provide liquidity to meet institutional demand for immediacy." The expected return for an individual investor deteriorates as time horizons get shorter and longer than 20 days, with professional traders dominating individuals at the shorter end and professional investors at the longer. http://archive.nyu.edu/bitstream/2451/26930/3/CFE-04-04.pdf.txt http://archive.nyu.edu/bitstream/2451/26930/3/CFE-04-04.pdf....