84% of All Stock Trades Are By High-Frequency Computers … Only 16% Are Done By Human Traders

Given The Dominance of The Machines, Do Flesh-and-Blood Traders Have a Chance?

As of 2010, 50-70% of all stock trades were done by high frequency trading computer algorithms.

And many other asset classes are dominated by high frequency trading as well.

High-frequency trading distorts the markets.  And see this, this and this.  And it lets the big banks peak at what the real traders are buying and selling, and then trade on the insider information. See this, this, this, and this.

Morgan Stanley has just shown (via the Financial Times) that the percentage of high frequency trading in the stock market has skyrocketed to 84%:

Trading by “real” investors is taking up the smallest share of US stock market volumes [since Morgan Stanley  started keeping track 10 years ago.]

The findings highlight how US trading activity is increasingly being fuelled by fast turnover of shares by independent firms and the market-making desks of brokerages, many using high-frequency trading engines. [actually all of the market-making desks are using it.]


The proportion of US trading activity represented by buy and sell orders from mutual funds, hedge funds, pensions and brokerages, referred to as “real money” or institutional investors, accounted for just 16 per cent of total market volume in the form of buying, and 13 per cent via selling in the final quarter of last year, according to analysis by Morgan Stanley’s Quantitative and Derivative Strategies group.

It’s not just the U.S. High frequency trading dominates in the U.K. as well.

Given the dominance of the machines, do flesh-and-blood traders have a chance?

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  • http://intermittent-fasting-secrets.com dlxias

    I was under the impression most HFTrades are arbs, largely unobtrusive and somewhat beneficial for reducing bid-ask spreads.

  • William Dziekanowski

    Just imagine if all the computers were programmed to fleece the system by adjusting buy and sell times a few seconds to grift off every transaction . This can be done by hooking up and linking higher buy offers with connected sellers ,and hooking up that same group of people with the lowest sell offers that they in turn buy and sell within a few seconds to someone else ,over and over every day. Imagine its so fast , The actual DOW JONES board lags behind the vampiric program.

  • Jason R Aherne

    This is very educational content for all stock traders and written well for a change. It’s nice to see that some people still understand how to write a quality post.!
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    This was a very informative article. Thank you for sharing with your readers.

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    Machines do this kind of work faster than humans so it should not be surprising that machines dominate. Interesting information.

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