I think it would be an understatement to say that there is a lot of confusion in the mainstream press and in the blogosphere regarding high frequency trading (HFT). For many of us, it is only in the last few weeks that we have started to add the words "co-location," "flash trading," and "predatory algorithms" into our lexicon. Fortunately for HFT novices like myself, blogosphere luminaries such as Karl Denninger of The Market Ticker and Tyler Durden of Zero Hedge have been vigilant in trying to educate us regarding the potential for market manipulation that apparently surrounds HFT. Furthermore, I think that people such as Joe Saluzzi from Themis Trading have done a great job in explaining what HFT is in a way that people who have never worked on a trading desk or never created an advanced trading algorithm can understand. As a result, I am not going to try to explore the nuances and potential pitfalls of HFT. I will let those who have far more experience than I tackle that. My concern only surrounds the illegal uses of certain HFT strategies.

Having said that though, I happen to think this entire developing story is fascinating. Starting with the details of the stolen Goldman (NYSE: ) algorithm and the US prosecutor’s admission that anyone (including GS) could use it to manipulate the markets, you have a very compelling beginning to a new Russell Crowe movie about corporate espionage and government conspiracies. And now that we find out that some of these HFT programs could be used to front run trades and provide phantom liquidity, I wouldn’t be surprised if Jerry Bruckheimer is currently taking diligent notes. Where is a Law and Order "ripped from the headlines" episode when you need one?

All joking aside, I think the people who espouse the virtues of HFT could use some advice on how to sound more credible. If types of HFT are not actually as nefarious as some people seem to believe they are, then the proponents are doing a terrible a job of defending them. So far, I have seen a couple of arguments that don’t help their cause in the slightest. Both were articulated by Irene Aldridge of Able Alpha Trading who is about to publish a book entitled "High-Frequency Trading: A Practical Guide to Algorithmic Strategies and Trading Systems." If you haven’t watched her showdown with Joe Saluzzi from last week I highly recommend it. Not that all of it is comprehensible due to the fact that the CNBC moderators always allow people to talk at the same time. But, her reactions to the criticisms are very curious and seem somewhat indicative of a person who doesn’t spend much time out of the office or read the newspaper. Here are a couple quotes from Ms.