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These days, it’s not just standard media reports that can rock the stock exchange.
Social media once again showed how effective its reach can be last week, when hackers tweeted that the president had actually been eliminated from the Associated Press’ Twitter account.
The tweet set off a selling spree, and the stock market immediately nose dived– just to bounce back minutes later, when the AP issued a public statement describing the hack.
This must function as a warning to specific investors either considering or already finding themselves swept up in high-frequency trading: For the many component, you are escape of your organization.
Brenda P. Wenning, AdviceIQ contributor and head of state of Wenning Investments LLC, clarifies:
‘If the White Residence surges truly occurred, the algorithms that make decisions for high-speed traders would continue selling, leaving the typical investor behind as stock values tumbled.
It shows how much the game is tilted against various investors. The cacophonous floor trading that you see on tv is passé. Nowadays, high regularity trading algorithms initiate 70 % of stock trades on UNITED STATE exchanges. There’s no method you can beat them.
Do you think you can develop a great trade, log into your online brokerage and click sell? By the time the software debits your bank account and performs the trade, you missed out on the opportunity. Throughout the Twitter Flitter, my own order entry display was moving so rapidly it was impossible for any human to react and make smart stock selections.’
The bottom line: Nowadays, computer system speed has become just about as as vital for successful trades as excellent old made knowledge. And it’s one more piece of evidence supporting the notion that individual investors are not helping themselves by obsessively day trading. Not only have actually researches revealed that day traders are not as successful as those who purchase passively managed index funds, but you are pleading your brokerage firm to select apart any gains you may pocket with trading and task charges along the means.