How To Beat High Frequency Trading With Long-Term Investing | Exploring Markets

How To Beat High Frequency Trading With Long-Term Investing

People are increasingly scared of the stock market. One of the main culprits is the rise of high-frequency trading and algorithmic trading.
  • What are people on Wall Street doing to deceive ordinary investors or traders?
  • How are computers making it difficult to get the best price for a stock?
  • Are HFT funds front running your buy and sell orders?
The legendary Wall Street investor and thinker Bill Miller has a solution for you. Don't even worry about those types of traders. Actually, what you should be doing is trying to beat them at their lack of patience. Time is on your side. While everyone is focused on trying to make money in minutes, and days, you should exploit that by expanding your time horizon to years and generations:

"Time arbitrage just means exploiting the fact that most investors – institutional, individual, mutual funds or hedge funds – tend to have very short-term time horizons, have rapid turnover or are trying to exploit very short-term anomalies in the market. So the market looks extremely efficient in the short run. In an environment with massive short-term data overload and with people concerned about minute-to-minute performance, the inefficiencies are likely to be looking out beyond, say, 12 months." - Bill Miller