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High-Frequency Follies

“HFT traders were very active from July 2011 to September 2011. From July 8 to Aug. 8 the Dow fell 17.3%—13.4% in the first six trading days of August alone. The CBOE Volatility Index (VIX), dubbed the “fear index,” traded at 16 in early July but moved up to 48 by Aug. 8. Panic was everywhere.  HFT was both hyperactive and ­hyperprofitable in this period, while individual and institutional investors lost more than $3 trillion…”