If HFT is indeed lowering the cost, how come they are making the money and not the retail traders?
This sounds like an odd question if you transpose it to any other market where automated systems have lowered costs:
"If Amazon is indeed lowering the cost of buying books, how come they are making the money and not the consumer?"
"If Expedia is indeed lowering the cost of booking a plane ticket, how come they are making money and not the traveler?"
"If Toyota is indeed lowering the cost of manufacturing a car, how come they are making the money and not the auto buyer?"
Retail traders benefit from the cheaper trades facilitated by high liquidity in automated trading. There wouldn't be anywhere near as high liquidity in many of these stocks if there weren't automated systems trying to make money on penny price shifts.
That's a great point about Amazon. In fact, Amazon is playing the role of both exchange and market maker. Can you imagine the shitstorm of comments if a stock exchange tried that?
This sounds like an odd question if you transpose it to any other market where automated systems have lowered costs:
"If Amazon is indeed lowering the cost of buying books, how come they are making the money and not the consumer?"
"If Expedia is indeed lowering the cost of booking a plane ticket, how come they are making money and not the traveler?"
"If Toyota is indeed lowering the cost of manufacturing a car, how come they are making the money and not the auto buyer?"
Retail traders benefit from the cheaper trades facilitated by high liquidity in automated trading. There wouldn't be anywhere near as high liquidity in many of these stocks if there weren't automated systems trying to make money on penny price shifts.