>and that probably means the middle class day-trader rather than the NYC firms with billions to spend
First of all there just aren't that many middle class day-traders, and they don't trade in very large size. If they were the targets of HFT, the industry would be absolutely tiny.
Second, the small day traders just don't have enough volume to cause significant price impact. They just can't move the market enough for the HFTs to profit off of it.
Third, you'd be surprised at how unsophisticated and careless many huge institutional investors are. And sometimes they're just willing to pay extra to get in or out very quickly.
First of all there just aren't that many middle class day-traders, and they don't trade in very large size. If they were the targets of HFT, the industry would be absolutely tiny.
Second, the small day traders just don't have enough volume to cause significant price impact. They just can't move the market enough for the HFTs to profit off of it.
Third, you'd be surprised at how unsophisticated and careless many huge institutional investors are. And sometimes they're just willing to pay extra to get in or out very quickly.