Average stock ownership: 22 seconds

Computerized high-speed trading accounts for most trades, experts say.

By Kim Peterson Jan 3, 2011 1:58PM
trader © Comstock/SuperStockWhat, you bought a stock one whole hour ago? And you still own it? That stock is practically a dinosaur in Wall Street's new reality.

The average time a stock is held is 22 seconds. But that's an improvement from a year ago, when it was 20 seconds, according to analyst Michael Hudson, an economics professor at the University of Missouri.

It's all because of computerized split-second trading. "The financial sector is short term," Hudson said in an interview. "They talk as if they're long term."

Wired has an excellent overview of how computerized trading has taken over Wall Street. It's so bad now, in fact, that computers now read news articles at lightning speed, searching for key words that will help them buy stocks. Post continues after video:
"The machines aren't there just to crunch numbers anymore; they're now making the decisions," Wired reports. Computerized high-frequency trading makes up about 70% of all trades, experts say.

How can the individual investor compete with that?

7Comments
Jan 3, 2011 3:11PM
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How can the individual investor compete with that?
Easy. By ignoring it. Short term trading to make a penny or two in 22 seconds doesn't change fundamental price of the stock. Over the long run, the price (within a certain amount of course) trades based on the publics perceived fundamental value.  
Jan 4, 2011 12:18PM
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This was my crazy job for 7 years, now assumed by computers, thank god. I had 32 data feeds at my desk for over 300 trades/avg daily. One day I could be king, the next I was fecal matter. So let computers now do the schiziod trading that ruined my career and health, and also that of many others.

 

Computers do this work without complaint, but also make  more bad trades due to the absence of that crucial human factor of "gut" feeling that often contributed to better choices.

 

Humans still rule. Everything.

Jan 8, 2011 2:13AM
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...Terminator" lately???

Ive evolved.  Recently watched LIFEFORCE, Cemetary Man, and FIVE GRAVES TO CAIRO!

 

Evolving Ogre

Jan 8, 2011 2:11AM
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How can the individual investor compete with that?

Us little investors wont bothering to compete, nor can we afford to lease a beautifully designed CRAY.  So, it will kill the daytrading business; including us that hold for week+++.

 

And,  the real loser is websites like this and CNBC who benefit from the little guys.

 

So,  when will the SEC step in and end the hedge fund manipulations?

 

SIGH

Jan 4, 2011 9:38PM
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Has anyone watched "Terminator" lately???
Jan 4, 2011 6:48PM
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Most investors.. are not in a stock to make a 22 second trade..  The machines can pass along fractions or decimals to tug and pull with each other.. 
Jan 4, 2011 1:42AM
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locating closer to wall street to save a nano second or two and make an xtra penny on 50 million shares may make good financial sense for the traders, but average folks with just an old apple laptop will be driven to ETFs and target date funds and eventually lose even the nominal interest they have rejuvenated in the past year for the market.  The new game in town will be  something that levels the playing field agian, or gives the perception of leveling the field.  Its not to hard to see tht I cant fit a Cray computer in my doublewide, so goodbye hectic trading and hello to ?
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