Why These Stock Traders Are Not The Enemy

On a recent episode of The Drift, the weekly markets show hosted by thinkorswim and tastytrade founder Tom Sosnoff and trader Adam Mesh, Sosnoff pushed back on the common retail assumption that high-frequency trading is the enemy of individual investors. Asked about traders essentially competing against AI and computer-driven trading, Sosnoff argued that the framing itself is off. In his view, retail investors are conflating two very different activities. "Computer trading is not, has never been your counterparty. Let's be very clear about this. Computer trading has existed forever, but computer trading is a form of index or basis arbitrage. And it's much more on the prop business. It's not counterparty to customer trades." Sosnoff then drew a sharp distinction between prop-desk algorithmic trading and the high-frequency market makers who actually sit on the other side of retail orders. "Customer trades, the counterparty to customer trades, is a high frequency environment. The high frequency environment doesn't care about anything except scale. So it's whoever makes the best markets gets the most scale." His conclusion cut against the popular narrative that HFT preys on small investors. "And so the idea that there's something negative in there, it's not. It's the more high frequency traders, the better, because it makes better markets for customers." The framing lines up with a broad body of academic research suggesting that HFT participation is associated with tighter bid-ask spreads, deeper liquidity, and lower execution costs for retail traders though the same research also flags concerns about market stability during periods of stress and structural disadvantages for less-informed participants. Sosnoff, who now leads a new venture called Lossdog after building thinkorswim and tastytrade, has made similar arguments in past interviews, including a Q&A with CME Group in which he described high-frequency firms as "competing with each other, not with you." For active traders, the practical takeaway is that competition among high-frequency market makers is what drives spreads on retail-friendly platforms toward near-zero and helps power the low-commission environment that many traders now take for granted. #TomSosnoff #HighFrequencyTrading #Trading 🌐 Find more market-moving insights at https://www.benzinga.com — your one-stop destination for the latest financial news, data, and expert analysis to stay ahead of the markets. 🖥️ Want the same tools the pros use—without the $10K Bloomberg terminal? Benzinga Edge gives you real-time portfolio alerts, weekly stock picks, and pro-grade research in one command center. 👉 https://bit.ly/4unSKiB ------------------------------------------------------------------------------------ 📲 Follow us on socials @benzinga 🔔 Subscribe To The Channel: https://www.youtube.com/@Benzinga ------------------------------------------------------------------------------------ ⚠️ Disclaimer: Investing in financial markets carries risk, and there are no guaranteed returns. All information is for educational purposes only and should not be taken as financial advice. Always do your own research and speak with a qualified financial advisor before making investment decisions. Only invest what you can afford to lose. Past performance does not guarantee future outcomes.