Monday, July 14, 2014

Trading Volume and Frequency - A sign of something?

In last couple weeks, I have read multiple articles about how trading volume has slowed down.  Just today, a Wall Street Journal article (Empty Floors Fray Traders' Nerves http://online.wsj.com/articles/empty-trading-floors-fray-nerves-on-wall-street-1405302362 ) made me realize, maybe it is more than a fad, but a long-term trend. 

The article was about how bond trading is down and "boring."  The economic downturn caused new regulations and empty desks.  The new regulations kept the empty desks empty and with fewer people, there are fewer people to make sales calls and trade securities.

Another player is computer-aided trading, also known as high frequency trading.  High frequency trading can be used to sneak in before large orders or as the first  orders after a news event.  They make there money based off of making hundreds of trades throughout the day and manufactured using algorithms and complex programs.  Mark Cuban has voiced his opinion about high frequency trading in his blog,  http://blogmaverick.com/2014/04/03/the-idiots-guide-to-high-frequency-trading/ and he isn't afraid to come after them. He thinks it should be banned.  It's manilipulating the stock market and only certain giant players can play the game.  It short changes the average investor and makes the stock market unwelcoming. This is a rare comment coming from a guy who owns a NBA franchise and loves competition.

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I am writing this blog as a hobby and to share my projects in electronics, programming, and engineering.