Study: High-Speed Trading Hurts Long-Term Investors

Scott Eells/Bloomberg

WASHINGTON—Scott Patterson of The Wall Street Journal reports that some of the most heavily traded U.S. stocks might also be among the most expensive to trade, costing investors as much as $2.5 billion a year, according to a New York trading and research firm.

Stocks such as Bank of America Corp., BAC +1.41% Microsoft Corp., MSFT +1.14% Cisco Systems Inc., CSCO -0.26% and Ford Motor Co. F -0.11% are so popular with high-frequency trading firms that long-term investors often have trouble quickly buying and selling the stocks, according to a report by Pragma Securities LLC.

Investors trying to trade cost-effectively often find themselves standing in line behind the fleet-footed traders and are forced to wait to execute their trades, which in turn can cause poorer results, the report says. The upshot: Investors are often paying more for many blue-chip stocks than they would have otherwise.

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