Recent market falls of 5% followed by rises of 4% the following day demonstrates how quickly market sentiment can change. Markets have become more gittery.
But it should be remembered the long term outlook for the global economy doesn't change by 4% daily and high frequency trading, where shares are held for a few seconds, is being blamed for recent market volatility. This type of trade now accounts for 68% of US trades and 35% of trades in Europe.
High frequency trading should be curbed to protect market integrity. Stamp duty could be increased for anyone holding a share for less than 7 days and tax duty and capital gains tax could be reduced for those holding shares for five years or more.
A 'flash crash' - a drop of more than 15% in an index over a 15 period or less - was relatively rare.
Excluding the 1930's there was one in 1946 then none until 1987. It appears we now get one every six months!
