The US stock market has been peddled as an icon of equality over the decades, an open market where the poor can be captured and become rich to the extent of becoming a billionaire. However, behind the brightly polished stories and ascending graphs, there is some kind of silent suspicion that is growing. Numerous retail investors have played a game in which the rules vary each time someone is in the table. It is not necessarily about unlawful manipulation; it is sometimes about privilege access, speed and influence. So here is the hassling question: is the market really free or is it simply? cleverly designed to benefit those already in the lead?
Speed Wins
The high-frequency trading companies run their businesses on a microsecond basis, thereby trading with a speed that none of its human or even simple systems can respond to. When it comes to everyday investors, it is entering a race and other buyers are miles away.
Information Gap
Big institutions do not necessarily contain more data, but they possess superior, quicker, and in many cases, exclusive insights. Retailers tend to be responsive to news; big players tend to prefer to be placed ahead of the news.
Market Makers’ Edge
Liquidity is controlled by market makers and so there is a latent power of control. They perceive flows of orders, sense sentiment before others and able to trade before the crowd even knows what is happening.
Dark Pools
A major part of the trades occurs in non-public trades known as dark pools. These are conducted to the shadow of the wall, and the movements of prices can be manipulated without the retailers being aware of the entire picture.
Retail Illusion
Investment of money has become simple and accessible through the assistance of apps which seem like a game. However, under the facade, the complexity is not distorted–indeed, usually misinterpreted.
Pump and Dump Cycles
There is an exaggeration of trading based on hype by the social media. Although it appears to be a retail power, big players tend to surf on these waves, as they can enter them early and get out before the crash occurs to smaller investors.
Regulation Loopholes
Regulators are there, but they are not equally enforced. Big companies can afford to manoeuvre, dodge or even abuse grey spaces that even small players cannot even get into.
Liquidity Control
As markets become volatile, liquidity may dry up on retail traders- institutions will still find ways of transferring capital efficiently. The result of that imbalance manifests itself in crashes painfully.
Psychology Games
The market is not about numbers homelessly, it is about behavior. Massive actors have fear and greed of scale, which often provokes responses among retail investors into predictable behavior.
Access to Capital
The most obvious benefit: possibly the easiest one, is, money makes money. Megafunds are able to endure recessions, average losses and bide their time. Smaller investors are usually compelled to make an exit at the worst time.
