Financial author Michael Lewis documents the story Zero Hedge broke five years ago. High Frequency Trading, done with a wink and a nod from the government, allows big money to buy and sell milliseconds before everyone else. Their profits are thus guaranteed and the market is rigged. A millisecond is all they need to make, say, a penny a share. They do millions of times a day. The government pretends this big pocket money are “market makers” and thus allowed to act on orders before anyone else can, which of course shows how crippled and complicit the government in actually regulating markets.
For those who missed it, here it is again. In the video below, Lewis explains how an extra millisecond allows high-frequency traders to exploit computerized trading in the U.S. stock market. By “beating” investors to exchanges, Lewis argues that high-frequency traders can buy stocks and quickly sell them back at higher prices.