It is not a zero sum game between you and HFT. It IS a zero sum game between an HFT firm and another HFT firm, or an HFT firm versus people specialist traders. You think that burly guy from queens who used to be a janitor and now works on the floor of the NYSE will give you a good price? HFT cuts the line in the sense that it competes with him to give you a better price. HFT firms are fast to compete for your business vs other HFT firms. HFT and the average retail investor is not a zero sum game. It is mostly zero sum between HFT and the old system of specialist traders. It turns out the biggest critics of HFT are the old specialists who have lost their jobs and people who do not know what they are talking about.

So say you trade against an HFT algorithm. If you are talking about the narrow context of the trade, it is zero sum. But that is not how the world works. Bill Gates can sell a share of Microsoft to a market maker trader/HFT. Say he does this for $26.00. Tomorrow, it goes to $30.00. In the context of the trade, Bill Gates "loses" $4 to the HFT algorithm. But that is not the whole story. He took that $26 and did something with it. Maybe he helped fund a startup which has created value and doubled his money. So now the HFT trader is up $4, and Bill Gates is up $26. Zero sum, huh? Or maybe he invested it in a Malaria vaccination program that has no easy dollar valuation but is clearly positive to the world. This is why in the context of the system, everyone can win, and it can be a positive sum game.

If you invested your savings 18 years ago for your kid to go to college, at some point you will sell that stock to raise cash and pay for college. You are investing in your child's education, so that he can have a good life, invent things, cure cancer, solve P vs NP, improve Shor's algorithm, and more. That seems like a good return, even if 4 years later the HFT algorithm you sold your stock to made money because the stock went up.

When the world changes, prices change as well. As an HFT firm, you are always sending prices that are competitive for customers. HFT being fast is the effort to improve prices as quickly as possible, or admittedly, pull prices if they are no longer fair. Often, this is a typical scenario for an HFT firm…news comes out on a stock that is positive. The old bid for the stock was 20.00. That means if you are sending an order to sell your shares in the stock, to say, raise money to send your kids to a good college, you will hit the bid at 20.00. If HFT is not fast, you will get $20 for your share, even though the news hit 2 seconds ago. HFT algorithms compete for your business in the sense that they try to be fastest to improve that bid price to 20.05. If they are not fast, you get $20. If they are fast, then you get $20.05. What is the problem here?

The bottom line of all this misunderstanding is, I believe, a distrust of where all this money is coming from that they make. It's simple--it's from them cannibalizing the old human, specialist trader business (do you know how many billions they made from retail before HFT?). It's no different from a startup upending an old industry veteran by undercutting their prices by 90% and taking away all their business.