“The beauty of the stock market is that it’s an astonishingly easy place for buyers and sellers to connect with one another. If you want to sell almost any stock, you can find a buyer within seconds and know within a few cents how much the buyer will pay. (Compare that with selling a house or a car or even an old piece of furniture on Craigslist.) In the old days, the stock market worked because there were people — so-called market makers — whose job was to ensure that there was almost always a willing buyer and seller for every stock. In the past decade, their jobs have been largely replaced by high-frequency traders who provide this middleman service. Over time, this shift to technology has generally made it cheaper for everyone, including long-term investors, to buy and sell stocks. But there are notable exceptions. A trader using a high-speed connection to jump in front of a deal between a willing buyer and seller is driving up costs for the buyer and isn’t really improving the market.”

– http://www.nytimes.com/2013/10/13/magazine/high-frequency-traders.html?pagewanted=2&ref=todayspaper