How High-Speed Traders Outraced the Profits

For the last few years, the stock market has been a race among high-speed traders. The game was simple: The fastest traders won the most profits. Since speed was all that mattered, trading got exponentially faster. In the last five years, the time it takes to trade a stock went from being measured in milliseconds to microseconds. The fastest firms can now execute a trade in under 10 microseconds. It takes 350,000 microseconds just to blink your eye.

Now it appears the advantages of speed are starting to dissipate, and being the fastest trader isn’t worth what it once was. High-frequency trading profits are expected to fall 35 percent this year, 74 percent below their peak in 2009. In an ironic twist, high-frequency traders have gotten so fast, they seem to have outrun their own profitability.

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