Not sure if this was posted before, but I thought this was kind of interesting: http://www.nytimes.com/2009/07/24/business/24trading.html
That was an interesting article. 2 things reallu pop out: “Automatic programs began issuing and canceling tiny orders within milliseconds to determine how much the slower traders were willing to pay. The high-frequency computers quickly determined that some investors’ upper limit was $26.40. The price shot to $26.39” “The slower traders began issuing buy orders. But rather than being shown to all potential sellers at the same time, some of those orders were most likely routed to a collection of high-frequency traders for just 30 milliseconds — 0.03 seconds — in what are known as flash orders. While markets are supposed to ensure transparency by showing orders to everyone simultaneously, a loophole in regulations allows marketplaces like Nasdaq to show traders some orders ahead of everyone else in exchange for a fee” This doesn’t seem fair. Is it possible to close/regulate these loopholes without seriously damaging market functionality? It seemed that markets were able to function without algo traders.