We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
Trading is not investing, but people make money doing it. This is a fascinating view of a growing part of Wall St. and world markets, and interesting people too. (H/T Exposing Wall Street's Hidden "Code")
More people lose money doing this than make money. Some make money then lose more (such as my neighbor). Still others make money doing it, but not enough to survive. As a good friend of mine who set up a fund said "when the crash came, I was doing well. Down 2% when the market was down over 30%. But the people who gave me money expected better returns, so they took their money back. I shut it down afterward."
It's a tough life, and no it's not investing. It's gambling, though with slightly better odds and more information.
High frequency trading is not unlike the hedge funds and derivatives which were much maligned after the crash. They don't cause the problems they are blamed for, in some ways they help mitigate the damage. But HFT is dangerous. It's not unlike a high-stakes game of Texas Hold 'em where two or three guys go all-in at the start, or on the flop. Good chartists are forced to push good information to the side and focus on different criteria that isn't medium or even short term. It's nano-second term, and once that nano-second is past, you need to forget it as fast as you considered it. It's a market without memory, but it is built on a form of memory, since the algos all require tracking so much data.
It's intriguing and the guys I know who are out of it now are interesting people, but shake their heads at the whole thing. It requires massive amounts of capital, and you need to have a huge appetite for risk.
But it plays a role. Like speculation, it's just another form of making markets and providing liquidity.
I'd like to see every financial transaction taxed at an extremely modest rate (.001%), as this would create a huge amount of revenue for the government and would not be regressive. It would allow us to reduce or eliminate income taxes. But I'm a realist. The income tax would have to be eliminated first, otherwise it would just be another method of government taking.