>If I want to sell 100,000 shares of Yelp (which is a multi-million dollar transaction), the fact that several million dollars of Yelp is about to hit the marke

>If I want to sell 100,000 shares of Yelp (which is a multi-million dollar transaction), the fact that several million dollars of Yelp is about to hit the market is a really, really important bit of information. I have a reason to hide that from the rest of the market at least until I can complete my sale. HFTs profit by ascertaining my intentions faster than I can complete my intended action and then broadcasting my intentions to other market participants via the ticker tape, whereas previously my intentions were proprietary information locked in my head. Let me see if I understand your example. I want to dump 100k@100$ and yet the current book doesn't have that many buy orders (otherwise the order would just complete). The book has buy 1k@100 and sell 1k@105 So I try to be sneaky and just clean out the book with 1k@100, selling 100 shares each to 10 retail investors and wait for more 100$ retail investors to show up by placing another 1k@100 sell order. The HFT sees this quickly and puts in orders for buy at 90$ and sell at 95$. Now the next retail investor sees this and just buys at 95 instead of 100, saving 5. I need to then sell at 90 instead of 100, losing 10. The HFT firm makes 5. So the HFT firm is taking money from informed investors and taking some for itself and giving some to people who have no special information about the market like retail investors. If that is the case the only problem with HFTs are second order. That (much like bitcoin) they spend a bunch of resources with busywork that could be at least partially eliminated by more decimal points in pricing trades. And that they may discourage some informed investors from adding information to the market because they can't profit from it, reversing their benefit.