High Frequency Traders are now trading in microseconds. That’s one millionth of a second.

[Are_grits_groceries]

Fast, Loose, and Out of Control
Trading billions of shares in the blink of an eye has made stock markets more responsive—and volatile—than ever.

On April 26, the Dow Jones industrial average stood at 11,205, up nearly 70 percent since its low in March 2009. While there were bumps along the way, the ride from 6,500 to 11,205 was generally smooth and steady. But the placid markets were about to get hit by a tsunami. When it became evident that Greece’s financial woes might spark a Europe-wide sovereign-debt crisis, the waters began to churn. The Dow lost 214 points on April 27 and posted triple-digit moves on 13 of the next 17 trading days. Worst was the “Flash Crash” of May 6, when the Dow lost 998 points in a matter of minutes, only to rally more than 600 before closing down nearly 350 points.

Suppressed for much of the recovery that began in the spring of 2009, market volatility has come roaring back. On May 21 the VIX, which measures the volatility of the S&P 500, and is also known as the “fear index,” spiked 25 percent. Who is to blame? Many analysts have fingered high-frequency traders, computer jockeys who plug complex trading algorithms into superfast computers and scour the markets for tiny price differentials. By trading vast amounts of stock at warp speed, as many as a billion shares a day, high-frequency traders gobble up fractions of cents at a time. The more volatile the market, the easier it is for them to make money jumping in and out of stocks across exchanges.
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High-frequency traders may have become the new villains of finance. But their computer-driven methods, which now account for upwards of 70 percent of all U.S. equity volume, aren’t going away. To a large degree, fundamental investment strategies—i.e., buying and selling stocks based on a company’s performance—have taken a back seat to algorithms hunting for inefficiencies.
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Four years ago, executing a trade in a millisecond (one thousandth of a second) was considered fast; now the top firms are trading in microseconds. That’s one millionth of a second.
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To fully understand this, you have to go back a decade, to the birth of HFT in September 2000. That month, then–SEC chairman Arthur Levitt, eager to push the market into the digital age, ordered exchanges to implement “decimalization”—i.e., allowing stocks and options to be listed in one-cent increments rather than 12.5-cent ones.
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It is precisely this ability to profit amid widespread carnage that has aroused the attention of regulators. Many have come to see high-frequency traders as nothing but digital piranhas, creating feeding frenzies that send the market into violent swings for their own profit.

Still, the first wave of regulation to come after the Flash Crash hasn’t been aimed at speed traders but at the exchanges, which 10 years after going electronic are still largely a patchwork of cobbled-together systems. So far, high-frequency traders have emerged unscathed.

Experts like Ben Van Vliet, a professor at Illinois Institute of Technology, believe big computer traders like GETCO and TradeBot will one day become something akin to electric utilities: entrenched, highly technological industry players with virtual monopolies on the market.
There's much more:
http://www.newsweek.com/2010/06/01/fast-loose-and-out-of-control.html

Place your bets!

(A post with more info about this practice: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8468016 }

[PassingFair]

1. And it took me eight days to sell my stock at work.

EIGHT DAYS!!!

What a RACKET!