Why the hell should a trading firm be required to hold a bid or offer out there for that long under changing market conditions? Would you?
If you want to slow the markets down, go back to the old days when lead market makers were guaranteed a minimum, meaningful spread. That used to be called 'unfair', too.
No one is going to provide liquidity when there's no opportunity to make money.
Yea, my bids are out there for sometimes at least that long. The difference is, my bids are an honest offer to buy at the limit price I’m specifying. I’m not painting the tape.
I’d go back to a minimum spread in a hot second if I could also get back to open outcry and real human floor traders, because with a human in the trading loop, there’s some common sense in there that says “Bid of $0.01? Bullcrap. Something’s wrong. Let’s find out what.” I never thought that the pre-decimalization spread was unfair, because I knew someone was making small change by using their money to provide liquidity in that spread.
Trading in inherently chaotic and unpredictable at some points, and taking all the humans out of the loop and inserting computers is about as smart as taking pilots out of the cockpits of airplanes. Sure, the FMS can handle most of the situations most of the time. When the “something else the small minority of the time” happens, I’d like some humans in the loop with some experience and common sense to say “Now let’s not panic here...”
There is justification for making a trade quickly, but there is no justification for getting in and out and in and out and in and out, etc. quickly.
The easiest solution to me is to either place a small tax on all transactions or a large tax on multiple transactions of the same security. I hate taxes, but I don’t know how else to stop this obscene wealth transfer to whoever has the fastest trade platform and best algorithm.