The Uptick Rule - Love It or Hate It?

It has been almost a year since the uptick rule was removed from US stock markets, and traders are divided upon whether the markets are better or worse without the uptick rule. Some traders believe that the removal of the uptick rule has caused an increase in volatility and erratic trading, while others believe that the uptick rule caused erratic trading, and that its removal has smoothed the markets.

The explanation for this difference of opinion is quite simple. The uptick rule was created to artificially keep the US stock markets moving upwards, by restricting short trades from being entered. The traders that prefer the markets with the uptick rule are usually buy and hold investors, and therefore they only want the stock markets to go up. The traders that prefer the current markets are usually professional traders, and therefore they don't care which direction the markets are moving.

Further information about the uptick rule is available in the uptick rule glossary entry, along with a discussion of why the uptick rule was unnecessary interference with natural market dynamics.

If you have an opinion about the uptick rule, and would like to make your opinion known, please answer the following poll: