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Joe Saluzzi on High-Frequency Trading: The Equity Market Is Now Controlled by the Machines

Original Content
17
By Adam Taggart
Saturday, February 5th, 2011

Joe Saluzzi on High-Frequency Trading: The Equity Market Is Now Controlled by the Machines

Original Content
By Adam Taggart on
Saturday, February 5th, 2011
17

Joe Saluzzi, co-founder of Themis Trading LLC and outspoken exchange expert, is concerned with how high-frequency trading has brought the capital markets into uncharted – and dangerous – territory.

"Things have changed," he cautions. With 50-70% of all trades being conducted by algorithms at micro-second time intervals, real human traders are increasingly challenged to understand how our markets actually work. "No longer do the technical patterns – that have lasted for years and years, and are written about all over – work anymore."

In the following interview, Joe and Chris plunge into "dark pools" and other poorly-understood elements of our now-machine-dominated financial exchanges. The current system is fraught with risks of further "flash crash"-like disruptions, and at a fundmental level, feels a lot like sanctioned theft by the deep-pocketed institutions who can outspend on technology and speed. This is an important interview for anyone involved in trading (professionally or personally), as well as investors who want to know how today's markets truly operate.

Click the play button below to listen to Chris' interview with Joe Saluzzi:

[swf file="http://media.PeakProsperity.com/audio/joe-saluzzi-2011-02-04-final.mp3"]

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In this podcast, Joe sheds light on:

  • How the complexity and pace of the current technology driving trades has become so complex that it has effectively evolved beyond our ability to fully understand its risks. 
  • Why the government agencies responsible for understanding and overseeing exchanges are woefully under-resourced and unprepared to be effective in this new era. 
  • How the average trader is destined to lose in today's market, while the big banks & HFT firms who can afford to win the arms race are making essentially-guaranteed profits.

As with our recent interviews with Jim RogersMarc Faber and Bill Fleckenstein, Jim ends the interview with his specific advice for the average trader/investor.

Listen to the Audio

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