Apple and the risks of trading 29,000 times per second

My fear as a pessimistic engineer is that unless there is more regulation of HFT, sooner or later someone big (a bank, an exchange, a country) is going to be financially wiped out by a HFT-gone-bad incident, and the resulting mess will take years to unravel while everyone else (pension funds, private investments, etc.) gets to suffer for the sins of their masters.<p>I propose an exponentially decaying tax on trades - the longer you hold a purchase, the less you pay when you sell it. If you WANT to trade at sub-microsecond levels, you can bloody well pay for the clean-up fund when your system goes bad.

Marvin8 on that site had a great comment. Here it is:<p>What I'd like to know is what happens to customers who have resting orders near those "fat-finger" trades. If a customer had a sell stop-loss at $583, did he get stopped out of the market at that price or near $582? I'll bet he did. If another customer had a buy order in at $583, did he get filled on the way down? I'll bet he didn't. The broker wil ALWAYS come up with a bs excuse as to why a customer got a bad fill and never gets a good one. It's the way the industry works. That's why folks are complete suckers to get involved. The industry makes BILLION$ screwing its customers.

I've been trying to figure out how to keep my money as far away from Wall Street goons as possible. The hit on Goldman Sachs' reputation from a couple weeks ago is the latest signal that Wall Street's job is to steal customers' money, stay away. The loss in confidence will eventually get them, though that will probably just mean they get another bailout.

"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."<p>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?<p>"Why, these investors ask, do false prints and fat finger trades always happen on the downside"<p>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.)

I'm sorry, but this reads like some sort of PR hit job vs. BATS.

Tom Clancy predicted this kind of thing years ago. Although in his story the catalyst was a foreign power messing with the system. Once things got rolling the automated systems went with it to the point of the whole system crashing. Clancy wrote it so that a retired money guy had to explain to the people in charge what really happened because they were clueless on how the system actually worked. The solution was to simply reset the clock back to what was before the problems began and they pretended it never happened. Some of the discussion on the economy and trading were really interesting in that book.

How is making 29,000 trades per second good for the market? It seems like trading at that frequency should be illegal.