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I've been wondering for a while why markets are more volatile these years compared to in the past, independent it seems of what's in the news, or of the fundamentals.

I'd guessed it was due to the increase in day trading, but I am wondering now if automated trading software is playing a part?

I was just reading another forum where a sudden stock dip caused automatic sales in several people's accounts as it hit their preset stops. None of them really wanted to sell in that environment (this dip was a few months ago) and they bought back in once they realized what happened.

Is the ease of setting automatic loss stops making the market more volatile? Is the so-called efficiency of the market decreasing because of this?
 

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I think computers have made easier for anyoneor even robots to access the markets and trade within seconds.

Add human panic to that and you get volatility.
 

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Nobody knows, I think we are only more volatile "these years" because of the financial crisis and stuff, that generally forces money out markets
 

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Generally speaking overt HFT orders are found and cancelled by the exchange. An example of this would be offering a million shares at $3.00 only to fill 1000 and then cancel the rest picoseconds later and while the bids rise to $3.05 and so on. What this can do is create a tug of war and artificially lift the bid price to remarkable levels. This doesn't represent real liqiduity becuase they are not shares intended to be sold, they are being used as bait to raise bid prices. This is what zero hedge refers to when he talks about "buy bots".
 

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Apparently, it takes hundreds of nanoseconds to place/complete a trade, hence I'm either a nanosecond or millisecond trader on volatile days; the speed is truly astonishing [if not loco], but true!!

1. picosecond = a trillionth of a second;
2. nanosecond = a billionth of a second;
3. millisecond = a thousandth of a second.
 
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