Study: High-Speed Trading Hurts Long-Term Investors – WSJ.com

Study: High-Speed Trading Hurts Long-Term Investors – WSJ.com.

Investors trying to trade cost-effectively often find themselves standing in line behind the fleet-footed traders and are forced to wait to execute their trades, which in turn can cause poorer results, the report says. The upshot: Investors are often paying more for many blue-chip stocks than they would have otherwise.

The results contradict a number of industry and academic studies that claim high-speed trading has cut costs for investors.

“In contrast to the academic consensus view that high-frequency trading is benign, our research shows that there’s a significant cost to the liquidity that they’re providing,” said Pragma Chief Executive David Mechner. Pragma, a research and trading firm, estimates the total cost could be $2.5 billion a year.

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