Raging Bulls: How Wall Street Got Addicted to Light-Speed Trading | Wired Business | Wired.com

Raging Bulls: How Wall Street Got Addicted to Light-Speed Trading | Wired Business | Wired.com: The defense of automated trading is that it lowers the cost of trading and improves liquidity by lowering the spread between bid and ask prices. “At the end of each trading day, equities wind up in the hands of people who want to hold them for appreciation or for dividends,” says Bernard Donefer of the Subotnick Financial Services Center at CUNY’s Baruch College. “If that’s you, you don’t have to pay attention to what goes on between 9:30 and 4:00 and can still get the benefits of lower costs and faster executions.” Fair enough, but as Arnuk and his partner Joseph Saluzzi point out in Broken Markets, you also bear the risk of heart-stopping price swings when the algos shut down their programs to avoid losses for their own reasons. They aren’t in business to make money for you.