High frequency algorithms versus human traders

The topic of the high frequency algorithms is a very hot potato. In fact there is a phenomenon called the rise of the machines. The stock market nowadays is totally dominated by the high frequency algorithmic trading. The old school of the technical analysis is facing hard times.

What is the difference between the high frequency algorithms and the human traders.
In fact the main difference is that the human traders are not cooperative between themselves buts the high frequency algorithms can cooperate in a blink of an eye and create strange moves.

Yes the market may seem the same but an experiences eye can distinguished that its structure is different. It does not behaves the same way like before, the risk level and the volatility is much higher. The volume in the stock market is somewhat artificial. The Forex market is different of course.

Is it possible to use the algorithmic trading trading to the benefit to the medium retail trader?
Well I think that with the fractal dimension analysis we have some tool that we can use.
The exposed ideas have the task not to be a holy grail (not at all in fact) but to reestablish the balance that has bee perturbed by the algorithmic trading.


Risk 1: A systemic risk of market failure

The high frequency algorithms are a source of systemic risk of the market. Remember the flash crash of May 6th 2010? In fact those algorithms work like turbo accelerators of the movement.
The common approach is to look for a software bug, but I think that there is much more than that in the darkness.

My hypothesis is that a proper way to analyze the market is to analyze it as a multidimensional phase space of possible solutions. And what happens? It happens that sometimes this phase space is not too difficult, or in other terms is in the reach of the computing capabilities of the high frequency algorithms. What happens then? It happens that those machines combines their effort and start to cooperate together and all this in a blink of an eye. This is a hypothesis could be valid only when we have many competitive machines and not only one mega machine dominating the whole market.

Risk 2: Point of no return. Are we there?
We have to cope with this new reality. This is true because if they get out of the market the market will collapse in a blink of an eye.