Do Machines Control the Stock Market?
You don’t have to be a sci-fi movie expert to know that when humans and machines clash, things usually go poorly for the flesh-and-blood faction. Just think back to The Matrix (the first one, not those god-awful sequels) to see what I’m talking about. So you can imagine my concern when I learned that perhaps as much as two-thirds of daily equity trading volume is the result of orders placed by — you guessed it — machines. Rage against the machines According to a recent Wall Street Journal article, “the majority of stock trades now originate with fully automated ‘high frequency’ funds.” These funds “trade in and out of stocks at light speed without human intervention,” making a minuscule profit on each transaction. This is all made possible by market centers like the New York Stock Exchange, which pay these high-frequency funds a tiny rebate for each filled order in order to facilitate liquidity. That might not sound like much of a strategy, but it becomes quite lucrative when you jac
