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July 13, 2009

The Battlebots of Wall Street

Andrew Leonard

The question of algorithmic trading has been debated since at least the first “program trades” of the 1980s, which were blamed for contributing to the stock market crash of 1987, and it has never been fully resolved. Defenders claim that the increased liquidity resulting from a proliferation of split-second electronic trades helps keep markets moving and lowers transaction costs. But critics argue that automated trading increases volatility, exacerbating wild swings up and down in the market, and gives those entities with access to the most computerized firepower a clear advantage over regular old retail investors.

Full story at Salon.com