Someone buying and selling used cars doesn't have the ability to crash the entire car market negatively affecting everyone that currently owns a car in the same way that high-frequency trading can with the stock market. I don't think your analogy works.
Those crashes primarily impact professionals... I'm not familiar with any enduring crash with sustaind impact to retail investors. I'm sure the value created by tightening spreads and creating volume dwarfs the cost of a momentary crash that impacts other professional traders (and a small fraction of retail traders).
I'm not saying that high frequency trading isn't shady, but it also serves a purpose. And I don't think the objective is to crash a market, it's to make money. These traders don't want scrutiny, so they are personally motivated to maintain order.
Individuals are also affected by decisions made by professional traders (e.g. mutual or retirement funds). Maybe crashing the market is not the objective, but it could be an unintended consequence, and the only real motivation is short-term profit, not "maintaining order" in fear of some hypothetical future regulation.
When did the length of the period of speculation become the moral compass for whether someone should be allowed to put their capital at risk.
I still think that everyone is missing a key point. There is huge value in programatic trading. The frequency of a crash with impact to retail investors (not traders willingly risking money speculatively) relative to the volume of spread tightening trading approaches zero.
It was not my intention to claim whether high-frequency trading is "good" or "bad". To be honest I don't think I have enough information to judge that. I just replied to your specific arguments which I considered wrong.
That said, I agree that rejecting algorithmic trading just because it's new, different, and scary doesn't seem like the best approach. Computers have disrupted most industries, and the financial industry is just one of them.
