What Retail Investors Get Wrong About “the Market Being Rigged”

Opinion. “The market is rigged” is the most expensive sentence in retail investing. It contains grains of truth — and each grain, misunderstood, leads investors to exactly the wrong conclusion. The playing field is genuinely tilted in places. But the tilt is measured in fractions of a cent, while the conclusions people draw from it cost them percentage points a year for decades. Let us separate what is real from what is costly folklore.

What is actually true

The microstructure is not level. Studies by SEC staff and the European Central Bank put high-frequency trading at roughly half of U.S. equity volume — the most-cited estimates cluster around 50 to 55%, though no authoritative update exists past 2020, so treat the precise figure as dated. Speed advantages measured in microseconds decide who captures the spread on individual trades. None of this determines whether the S&P 500 compounds at 10% or 2% over your lifetime. It is a tax on trading, not on owning — which is why it punishes the active and barely touches the patient.

Payment for order flow is legal, lucrative, and contested. Your “free” trade is routed to wholesalers who pay your broker for the privilege of filling it. This remains fully legal in the United States: the SEC formally withdrew its entire 2022 equity market-structure reform package — the rules that would have curbed the practice — effective June 2025, stating it did not intend to finalize them. Britain, Australia, and Canada ban payment for order flow outright, and the EU has moved toward a ban. So the U.S. retail investor operates under the most permissive regime in the developed world. The SEC’s own proposal-era analysis estimated that more competitive pricing could have saved individual investors between $1.12 billion and $2.35 billion a year — real money in aggregate, though that estimate comes from the withdrawn proposal’s economics, not a current measurement.

Wall Street’s incentives are not yours. Brokers earn on activity, funds earn on assets under management, media earns on attention. “Do something” is profitable advice to give and usually costly to take. Recognizing this incentive gradient — that an entire industry’s business model depends on your motion — is genuinely useful. It does not mean every product is a scam. It means you should always ask who gets paid when you act.

What is folklore

“They” control prices. The U.S. stock market is the world’s most competitive auction, with millions of participants and tens of trillions of dollars at stake. Coordinated control of broad market prices is a fantasy — the 2008 crisis destroyed several of the very institutions supposedly running everything. An individual cannot move Apple; for more than brief stretches, neither can most institutions. Prices emerge from the aggregate, not from a smoke-filled room.

The drops are engineered to shake you out. Sometimes selling is just selling — fund redemptions, margin calls, index rebalancing, a large holder raising cash for reasons that have nothing to do with you. Attributing every decline to manipulation is narcissism dressed as analysis: the market does not know you exist. There are episodes of genuine misconduct in financial history, but they are the exception, and building a strategy around the assumption of permanent conspiracy is a reliable way to misread normal volatility as malice.

You need secret knowledge to win. This is the most damaging myth, because the data demolishes it so completely. The S&P SPIVA U.S. Scorecard for year-end 2025 found that 85.59% of large-cap active funds underperformed the S&P 500 over the prior ten years, 89.93% over fifteen years, and 92.89% over twenty. Read that again: the professionals with every structural advantage — the speed, the access, the research budgets — lose to a dumb index roughly nine times out of ten over any meaningful horizon. Your disadvantage was never information. It is behavior: trading too much, paying too much, and quitting too early.

The costly conclusion

Here is where the “rigged” belief does its real damage: it becomes a license to gamble. “If it is all rigged anyway, I might as well buy meme coins and zero-days-to-expiry options.” The logic feels rebellious. It is backwards.

Consider what the casino actually looks like now. Cboe data shows options expiring the same day — 0DTE contracts — grew to 24.1% of all U.S. listed options volume in 2025, and a staggering 59% of S&P 500 index options volume. The instruments closest to pure gambling have never been more popular. The investors most convinced the game is rigged are lining up fastest for the tables with the worst odds.

The rational response to a tilted field runs the other direction. The more you believe the microstructure favors the house, the more you should favor the strategy that needs no edge at all: own the whole stock index, pay close to nothing, and wait decades. Cynicism about fairness should make you more indexed, not more speculative. The house edge in trading is measured in fractions of a cent per share; the self-inflicted edge of constant gambling is measured in years of compounding destroyed. One of these is imposed on you. The other is a choice.

It also helps to remember what market capitalization actually represents: ownership shares in real businesses earning real profits. The “rigged game” framing treats the market as a casino where prices are conjured. The index-fund investor treats it as what it mostly is — a claim on corporate earnings, bought cheaply and held while the index movers do the work. That is the entire philosophy behind the case for boring investing, and the SPIVA numbers are its annual vindication.

The bottom line

The market is unfair in small ways and miraculously fair in the big one: over decades, patient capital in productive assets gets paid, and almost nobody who pays for an edge keeps it. Stop trying to beat the tilted table at its own game. Own the index instead, and let time do what timing cannot.

Sources: U.S. Securities and Exchange Commission (2022 market-structure proposals; June 2025 withdrawal); Congressional Research Service / congress.gov (PFOF international bans); SEC staff market-structure research and ECB Research Bulletin (HFT volume estimates); Traders Magazine / Cboe (0DTE 2025 volume data); S&P Dow Jones Indices SPIVA U.S. Scorecard Year-End 2025.

This article is opinion and educational content, not investment advice.