Flash Boys

Before reading Flash Boys, I was only marginally aware of High Frequency Trading and had only a vague notion of what it was. Michael Lewis sheds a lot of light on how it works and who it benefits (hint: not you) and apparently, I wasn't the only one who was in the dark. HFT is usually portrayed as being a net win for the markets because it provides liquidity. That turns out to be far from the truth. Not only is the liquidity provided by HFT a false liquidity that benefits no one, it turns out it's just a way to take advantage of having faster access to market data to essentially skim from “normal” market activity. It's guys with faster connections and privileged access to market data taking your money when you trade while providing you zero benefit whatsoever in return.

You pretty much have to have faith that based on his reputation, Lewis is getting his facts straight since it obviously behooves the HFT traders to obfuscate what they're doing. If he's getting it right though, then there's a lot of crap going down that should shake your faith in the good intentions of majority of stock brokers. Fortunately there is a hint of optimism throughout the book and signs that things are changing, but the situation he describes so well is very much still happening today.