The Dark Side of HFT: Risks, Manipulations, and Ethical Issues! ⚠️⚖️
HFT also comes with serious drawbacks and risks that continue to raise concerns as of July 2025:
Market Manipulations: Some HFT strategies (for example, "spoofing" – placing and quickly canceling large orders to create a false impression of supply/demand, or "front-running" – using insider information or anticipating large orders from other participants) can be seen as manipulative.
Flash Crashes: The ability of HFT algorithms to instantly exit the market under stress can lead to sharp and unpredictable price drops.
Unfair Advantage: Small investors and traditional funds cannot compete with the speed and resources of HFT firms.
Volatility: In some cases, HFT can contribute to increased short-term market volatility.
"Tax" on Traditional Investors: HFT can profit at the expense of other market participants.
