Out of the four arguments, the most convincing argument for High Frequency Trading (HFT) being ethical would be its Reduced Costs. With HFT’s ability to create narrow bid/ask margins and reduce the cost of stocks, swaps, and bonds, smaller investors have more authority in investment and a better chance to grow. This influence creates a more equal market with improved opportunities for investing.

Conversely, I believe Market Manipulation to be the most convincing argument for why HFT is unethical. While HFT is an effective tool for the stock market, that effectiveness can be a double-edged sword by manipulating the market to create illegal advantages. In the article, Trillium Capital, an HFT firm, baited traders into investing in false trades and then canceled them when they made limit orders. Unethical practices like these are possible with HFT and create reasonable worry with investing and trading. The potential for further dangerous events in the market is also concerning due to the nature of HFT.

Due to the possibility of its natural danger, I hold the stance that HFT as it is now, is an unethical practice. Despite the benefits that HFT’s reduced costs bring for smaller investors and the market as a whole, there is greater potential in its algorithmic trading to be a tool used for illegal practice due to its effectiveness. While there are defenses like circuit breakers that restrict fast price changes in stock, more safeguards need to be put in place for more structured handling of this tool.