Dylan Ratigan on Banks and High Frequency Trading, Says Stock Market Is An 'Obviously Corrupt' Fraud

Dylan Ratigan's take on high frequency trading:

"Seventy percent of the volume is computers that are run by the banks playing ping pong with stocks for 10 seconds at a time."

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That's a quote from an informative article in Raw Story regarding high frequency trading (HFT). HFT is a major reason for the overall wackiness in the markets on a daily basis. According to the article, the banks see trades an instant before they are consumated by the exchanges and this gives them the opportunity to front run the trades.

...Cramer was right about the danger of HFT the other day, but he was trying to blame it on a million little guys sitting in their underwear in the bedrooms of their world headquarters. Laughable. All the little guys in the country are no match for the banks and their supercomputers. Where's the SEC taking care of the little guy on this issue?

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Paul Farrell on the MarketWatch website has run a series of articles in the past year or so regarding the corruption on Wall Street. The markets are flat to down over the past decade, yet the big Wall Street houses have made billions. But people still listen to the 'experts' and don't think for themselves. Most people, when it comes to investing, or more specifically trading, which is where my main interests lie, won't give themselves a chance to win.

...They're too smart for their own good. They hear about PE ratios and fundamentals, look for market niches, etc etc. They watch a guest on one of the talking head shows extol the virtues of a stock and run out and buy it. What I would like to see the host of one of those shows ask just once, when they show the now obligatory disclosure screen, is "If this stock is such a good candidate for a buy, why don't you, your family, or your company own any of it?"

...The more you try to figure everything out and step into the big boys arena, the less likely you are to succeed, imo. They are bigger, smarter (maybe not smarter than you, but certainly smarter than me), have better equipment, the brightest minds from Ivy League schools working for them, and better information.

...The field is tilted. It is not fair. But you can win. You have weapons, but you have to think for yourself and use them. Probably the single best advantage that little guys have is that the big guys are too big to hide their true intentions. Tune out all the garbage you hear from them. Their job is not to help you make money. Their job is to help themselves and their companies make money, and those are two entirely different things.

...The market moves in unexplainable ways on a daily basis - unexplainable, that is, if you think everything has to be logical, and those efficient markets are just doing their job. But it is explainable if you realize that the big guys push stocks around during the day many times just because they can.

...But over a longer period of time, it is much harder for them to disguise what they really think. You can find out what they really are thinking by watching price and volume on the markets themselves, and on leading stocks, and on the stocks you follow.

...For instance, if the recovery is in place and the worst is behind, why are the markets selling off? Why is the volume on the down days generally higher than the volume on the up days? Why are there more down days? Seems simple enough, but people still seem to latch on to every expert pronouncement and not see what is right there in front of them if they would just look.