A must-read for traders: Monsters in the Market by Timothy Lavin of The Atlantic.
If the majority of trades racing back and forth are simply lines of code swapping with other lines of code, moved by indicators obscure to even the mortal authors of the algorithms themselves, what exactly is the financial market? “The market structure’s totally changed, and it’s distorted what we do,” says Joe Saluzzi, the co-head of equities trading at Themis Trading and a vocal opponent of some high-frequency strategies. “The machine thinks for itself.”
Somewhere out there is a guy or girl who bought AAPL at 80 just 15 months ago and hasn't touched it since. That seems to be one of the very few ways to "compete" with the mechanical beasts. Buy C at 1 or F at 3 and leave it alone while the market gets a shot of growth hormone, aka stimulus money. But what happens when the injection wears out?
The machines never lose, never walk a batter, never allow even a bunt single. It makes sense, really, and explains how $27 billion has flowed out of the market so far this year.