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84% of All Stock Trades Are By High-Frequency Computers … Only 16% Are Done By Human Traders

Posted By admin On April 26, 2012 @ 2:53 am In Money Watch | Comments Disabled

Washington’s Blog [1]
April 26, 2012

As of 2010, 50-70% [2] of all stock trades were done by high frequency trading computer algorithms.

And many other asset classes [3] are dominated by high frequency trading as well.

High-frequency trading distorts the markets [4].  And see this [5] and   this [6].  And it lets the big banks peak at what the real traders are buying and selling, and then trade on the insider information. See this [7]this [8]this [9], and this [10].

Morgan Stanley has just shown (via the Financial Times [11]) that the percentage of high frequency trading in the stock market has skyrocketed to 84%:

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.

It’s not just the U.S. High frequency trading dominates in the U.K. [12] as well.

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URLs in this post:

[1] Washington’s Blog: http://www.washingtonsblog.com/2012/04/84-of-all-stock-trades-are-by-high-frequency-computers-only-16-are-done-by-humans.html

[2] 50-70%: http://www.washingtonsblog.com/2010/10/what-percentage-of-u-s-equity-trades-are-high-frequency-trades.html

[3] many other asset classes: http://www.washingtonsblog.com/2010/10/not-just-stocks-high-frequency-traders-might-be-manipulating-futures-options-bonds-currency-and-commodities-markets-as-well.html

[4] distorts the markets: http://www.washingtonsblog.com/2009/07/what-is-high-frequency-trading-and-how-does-it-distort-the-markets.html

[5] this: http://www.washingtonsblog.com/2009/07/corporate-media-spotlights-distortion-of-market-by-high-frequency-trading.html

[6] this: http://www.zerohedge.com/article/paul-wilmott-high-frequency-trading-may-increasingly-destabilize-market

[7] this: http://www.zerohedge.com/article/whoa-glitch-hft

[8] this: http://www.washingtonsblog.com/2012/2009/07/corporate-media-spotlights-distortion-of-market-by-high-frequency-trading.html

[9] this: http://www.zerohedge.com/taxonomy_vtn/term/8356

[10] this: http://www.globalresearch.ca/index.php?context=va&aid=18809

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

[12] dominates in the U.K.: http://www.washingtonsblog.com/2011/01/high-frequency-trading-dominates-uk-stock-market.html

[13] Not Just Stocks … High Frequency Traders Might Be Manipulating Futures, Options, Bonds, Currency and Commodities Markets As Well: http://www.prisonplanet.com/not-just-stocks-high-frequency-traders-might-be-manipulating-futures-options-bonds-currency-and-commodities-markets-as-well.html

[14] Corporate Media Spotlights Distortion of Market by High Frequency Trading: http://www.prisonplanet.com/corporate-media-spotlights-distortion-of-market-by-high-frequency-trading.html

[15] 70% Of All Stock Market Trades Are Held for An Average of 11 SECONDS: http://www.prisonplanet.com/70-of-all-stock-market-trades-are-held-for-an-average-of-11-seconds.html

[16] After Bashing The Entire Market Yesterday, Today Cramer Goes Nuts Against High Frequency Trading: http://www.prisonplanet.com/after-bashing-the-entire-market-yesterday-today-cramer-goes-nuts-against-high-frequency-trading.html

[17] Max Keiser: Big Banks Allocate Losing Trades to Clients, Keep Winning Trades for Themselves: http://www.prisonplanet.com/max-keiser-big-banks-allocate-losing-trades-to-clients-keep-winning-trades-for-themselves.html

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