A long-time natural gas trader told the Wall Street Journal that he is just avoiding the markets altogether, and even missing tempting prices swings and broker fees, because computers and high-frequency trading are dominating the market.
While computer trading was considered to be a concern in the stock market, the same practices are now being applied to commodity markets and the Wall Street Journal reports that many veteran traders are leaving the markets altogether, while robots haggle over fractions of a penny.
But in the past few months, unusual trading patterns have pushed many seasoned traders to the sidelines. One reason for the irregular activity is a strategy known as “banging the beehive,” in which high-speed traders send a flood of orders in an effort to trigger huge price swings just before the data hit.
Advocates of high-speed trading say their involvement increases liquidity in the markets. But the industry has been the focus of regulators worried about market integrity after events such as the May 2010 “flash crash” and a recent trading glitch at Knight Capital Group Inc.
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