Small Investors Can Fight Back Against High-Speed Investing
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They call it Wall Street for a reason…
According to Money Central at MSN.com, a ton of high-powered, high-tech equipment is turning the tide against the small investor. After all, the little guy has made some impressive strides in equaling the big investment firms.
Online trading and low-cost trading combined with increasingly powerful personal computers have helped the little guy take a few steps up in the Wall Street food chain. But, now high-speed trading and “dark pools,” that we mentioned in this post, are changing the momentum back in favor of investment firms.
According to Money Central, 7 percent of all trades are performed in “dark pools”–exclusive trading venues that independent investors can’t access. Trading firms that are using these dark pools also use lots of computing power and plenty of geeky guys and gals who are paid big bucks to exploit the system.
But, believe it or not, a smart individual does have advantages over these big firms.
The main advantage that an individual has is that he or she isn’t part of a corporation. No matter how many computers a company has, not matter how many offices a company has, and no matter how many brainiacs they have working there, companies rarely can get rid of group-think.
Group-think causes slow decisions or skewed decisions. Companies guided by group-think ditch their discipline as soon as a higher-up or the big boss disagrees. As evidence, notice how many “hedge” funds failed during the recent stock crash. (By definition, isn’t a hedge fund supposed to make money even in bad markets. Hedging, anyone?)
Independent investors can take advantage of this bureaucratic think.
Another reason that individuals can have success even in a company-dominated market is they now have access to robust computer power and computer-generated strategies.
Maybe as independent investors we can’t access dark pools or use high-speed trading techniques, but we can still make money by implementing smart, disciplined trading strategies.
Related posts:
- Should You Be Afraid Of Dark Pools?
- Even Higher Frequency Trading on the Way
- Three Keys To Prepare For Investing 3.0
- Five Ways To Fight Murphy’s Law And Win
- Seven Emotions Investors Can Do Without
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