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You'd think it was National Steal Profits From a Trader Day.
News.com reports that many angry traders were shut out of their accounts Friday as the market rallied massively. Several discounters were reportedly affected, including TD Ameritrade (Nasdaq: AMTD ) , Scottrade, and Zecco. It's less clear whether Fidelity, Charles Schwab (Nasdaq: SCHW ) , and E*TRADE (Nasdaq: ETFC ) suffered similar slowness or outages.
"Ameritrade has lost my confidence, and cost me MONEY," one poster wrote at a Yahoo! Finance discussion board. "The prices spiked on several securities in my account, but do you think I could login and sell?????? By the time I got on, the prices had all retreated."
I sympathize, really. And yet I'm also compelled to ask: Who didn't see this coming? I'm talking about the volume, not the lockouts. NYSE Euronext (NYSE: NYX ) and Nasdaq OMX (Nasdaq: NDAQ ) saw trading on their namesake platforms reach 2.42 billion and 3.96 billion shares, respectively.
Let's put this into perspective. A normal trading day lasts from 9:30 am to 4 pm. That's six-and-a-half hours, also equal to 390 minutes or 23,400 seconds. Now do the math: More than 169,000 shares changed hands every second on the Nasdaq on Friday.
Of all those shares, how many blue-chip institutions were fighting for the prime cut, the best prices? Probably more than we can count, right? Right. So isn't it fair to say that, most of the time, retail traders were chasing scraps anyway?
I'm not saying that this is a fair system. Traders have a right to be outraged. Heck, I would be. But I also wonder if this debacle offers us more than a sob story. I wonder if it reveals the principal weakness of the trading game; it's stacked in favor of the big institutions.
So let's quit the name-calling. Friday wasn't really National Steal Profits From a Trader Day. It was National Steal Profits From a Retail Trader Day.
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