"In 2011, BATS accounted for more than one in 10 U.S. stock trades, processing an average of 29,000 trades per second. Against that kind of computer power, retail investors don't stand a chance."
Correct me if I'm wrong, but isn't BATS an exchange? Why are retail investors "competing" against the exchange? Is the solution some sort of paper and pencil exchange? Or maybe we can go back to jumping up and down and flapping our arms?
"Why, these investors ask, do false prints and fat finger trades always happen on the downside"
Because anybody with money can take advantage of it. On the upside, only people holding the stock can do so (unless you short the stock, but I've never tried nano timeframe shorting.)
You're correct. It just means BATS is processing a lot of orders. I'm guessing LIFFE, LSE etc process far more. The articles conclusion is comepletey erreneous - this has nothing to do with HFT.
Edit: And wrt to retail investors "competing" agianst HFT - they're not. A retail investor is not interested in expoiting very short-lived pricing discrepancies between different contracts (or perhaps the same/equivalent contracts that trade on multiple exchanges). A retail investor is just that - an _investor_ - who holds the stock.
Retail 'investors' shouldn't have any issue with BATS if anything BATS provides liquidity, however retail 'traders' stand no chance because the computer is far better at technical analysis and pattern matching than the average trader. Retail traders never really stood a chance against institutions because retail trades the market rather than creating it like institutions do.
eg. A retailer can't execute a short squeeze but an institution can.
BATS is an exchange like NASDAQ. They're facilitating and executing trades for their clients. NASDAQ handled 70k per second in 2008, and could handle almost 4 times that load(http://www.forbes.com/forbes/2009/0112/056.html).
Correct me if I'm wrong, but isn't BATS an exchange? Why are retail investors "competing" against the exchange? Is the solution some sort of paper and pencil exchange? Or maybe we can go back to jumping up and down and flapping our arms?
"Why, these investors ask, do false prints and fat finger trades always happen on the downside"
Because anybody with money can take advantage of it. On the upside, only people holding the stock can do so (unless you short the stock, but I've never tried nano timeframe shorting.)