Eric Hunsader: Investors Need to Realize the Machines Have Taken Over

By the way, this action is for a single exchange – there are 13 in total. So you get the sense for the tremendous amount of trading activity that HFT algos generate in just 1 millisecond. Try to conceive of what the activity volume is in a second, a minute, a hour – it's mind-boggling. No wonder the regulators are so ineffective.

Is the presence of these HFT algorithms aiding with true price discovery? Quite the opposite, says Hunsader. Instead, HFT has made our markets unsafe – especially for the individual investor – as big institutional players, unchecked by our regulators, use their unfair advantages to fleece those without:

A lot has to do with the regulator not being in the room just clarifying some basic ground rules that are already in place. I mean, a lot of the tactics and things that go on now, if they tried to get away with this face-to-face in the past, somebody would be walking away with a black eye. People just don’t put up with this poor behavior. But the market is set up anonymously. So you don’t know if it's the same guy who hit you really hard the other day at your tipping point. I mean, 'everything goes.' And without a regulator or any sense of a regulator ever doing anything about it over time you get this creeping in of You know, we did that before and nobody ever said anything. So let’s try this. And that’s what happens. You just get this slow creep of a drop in ethics.

 

Click the play button below to listen to Chris' full interview with Eric Hunsader (34m:58s):