[pemulis]

Not really. HFT is a subset of algorithmic trading, where many small orders are placed to take advantage of intraday (or intraminute, or even intrasecond) shifts in the spread. A large strategic order executed through an algorithm is a different creature altogether.

The big problem when you place a huge buy or sell order is that it shifts the price in a direction you don't want it to go. For a large sell order, the price goes down, as the market becomes skittish about the security. For a large buy order, the price goes up, as the market becomes bullish and arbitrageurs quickly buy up securities to resell to you. So, many traders use algorithms to hide their trades. The purpose of these algorithms is to avoid volatility, so they shouldn't be dangerous to the market, as long as they're designed correctly.

(Although, to be fair, algorithms may automatically stop trading when the market becomes too volatile, which contributes to flash crashes by reducing liquidity.)

[dholowiski]

"so they shouldn't be dangerous to the market, as long as they're designed correctly". Even if we accept the author's position, why would we also make the assumption that this software is designed properly and bug free?

[shabble]

I guess it depends on the stakes, and how well the traders understand (the risks of) software development to pay for the quality, testing, and maintenance.

"This isn't just some human lives we're playing with, this is serious! It could cost us billions!"

[anamax]

> Even if we accept the author's position, why would we also make the assumption that this software is designed properly and bug free?

Is the software less reliable than people?

http://en.wikipedia.org/wiki/Barings_Bank

Note that the recent flash crash had about as much do with computers as a significantly worse "flash crash" in the mid/early 60s.