Flash Trading Has Transformed the Investment World
Traditional investors are an endangered species.
These are investors who think long term and hold on to stocks and other assets for a year or longer.
Traders, on the other hand, focus on the short term and aim to take profits in less than a year.
Now, more than ever, people are making fewer long-term bets on stocks than they used to…
Some argue that our culture of instant gratification is to blame. Others say it’s the fault of unsophisticated retail traders looking to make a quick buck in the market.
But if you think about it, the culprit is actually right in front of us…
Technology Marches On
During the 20th century, the world saw the birth of the information age.
For most of the century, however, computers were limited to academia and to big businesses that could afford them. Yet the race was on to make computers faster, smarter and more portable.
And, of course, Wall Street’s biggest investment firms made sure they had the newest and best computers that could give them an edge over their competition.
Meanwhile, most retail investors had to pick up their phones and place a trade with a flesh-and-blood broker… the old-fashioned way.
But things changed quickly.
By the late 1990s, personal computers at home were commonplace…
Online brokerages were becoming increasingly popular…
And frequent stock trading became as simple as a few clicks of your mouse.
Today, the average Joe has more information than he knows what to do with.
He has many times more computational power in his smartphone than Wall Street’s most powerful desktops had 20 years ago.
And he has constant, up-to-the-minute news on every event, anywhere in the world.
So why are investors a dying breed? It’s human nature.
People want more money, faster. And trading has never been easier or more profitable.
It’s not just Joe who wants in on the trading action. Wall Street does too.
In a Flash…
You’ve likely heard of high-frequency trading, or flash trading.
Whether it’s based on news, earnings or insider information not known to the rest of us, flash traders use advanced algorithms to make lightning-fast trades in the market.
Some trades are made in a few minutes… and some in nanoseconds.
At any rate, flash traders can make extraordinary returns in next to no time thanks to their high-powered software.
Now, most people think flash trading is limited to a niche market.
But it’s not. It’s actually far more common than many realize.
By some measures, at least half of all daily trading activity is flash trading.
Nearly every big firm on Wall Street has allocated resources for a flash trading desk. And these days, it seems like engineers are in higher demand at investment banks than traditional MBA holders.
Some flash traders, however, prefer to stay off the grid. Profit Trends‘ David Fessler is one of them.
A trained electrical engineer, Dave developed his flash trading system outside of Wall Street using his expertise and decades of market experience.
“I spent more than 30 years building powerful automated machines from the ground up,” Dave said. “I’ve applied this knowledge to create one of the most epic automated indicators in existence.”
Highly educated flash traders like Dave know what works on Wall Street.
“They’ve built the high-speed machines that buy and sell with every little blip of news,” Dave said. “MIT recently discovered the buys and sells on Wall Street happen within 85 nanoseconds. Literally faster than you can blink your eye.”
(Just imagine… while brokers and financial advisors are pushing clients into mutual funds, these same big firms are actually flash trading!)
But there’s one glaring problem: Whales can’t swim in shallow waters.
Wall Street’s big firms can’t invest heavily in small cap companies, the ones with the most profit potential. But, according to Dave, this is exactly where retail investors have the biggest advantage.
“You can make huge profits targeting smaller, under-the-radar stocks that get hit with big news days before everyone else drives the price higher,” he said.
And he has the research to prove it. He’s shown that not only can flash trading be highly profitable but it’s easier than most people think.
In fact, all it takes are the proper tools and the right guidance to one-up Wall Street.
People like Warren Buffett, Charlie Munger and John Bogle have proven that classical investing will always have a secure place in building wealth. But thanks to advances in technology and easier access to information, flash trading is here to stay.
And while asset allocation is an important part of smart portfolio management, we believe strategy allocation holds just as big a role.
Yesterday’s stock investor has become today’s stock trader. And flash traders like Dave are the vanguard in a new era of stock market fortunes.
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