COLUMN - The victims of high-frequency trading: Matthew Goldstein

-- Matthew Goldstein is a Reuters columnist. The views expressed are his own --

By Matthew Goldstein

NEW YORK (Reuters) - Even with all the fuss over high-frequency trading, there has been too little focus on how retail investors can get fleeced by Wall Street's superfast computer-driven trading programs.

Brian Watson's story is one that both ordinary investors and regulators should heed.

On April 28, Watson was caught in a freak trading storm as shares of Dendreon plummeted 69 percent in 70 seconds. The Seattle biotech's stock plunged to $7.50 from $24, as the company got ready to provide investors with an update on its experimental prostate cancer treatment drug.

In little over a minute, the equivalent of an entire day's worth of trading activity in Dendreon's shares took place before the Nasdaq stock market halted the stock.

By then the damage was done. The lightening fast selling triggered a so-called stop-loss standing order Watson had with his broker to sell Dendreon shares if the stock fell into the low $20s.

But the stock fell so fast that the broker didn't actually sell Watson's 1,500 shares until the price had hit $15.

Watson forfeited $18,000 in unrealized gains and absorbed a $1,500 loss. Now that may not sound like a lot. But it's a bitter pill to swallow when you consider that Dendreon shares quickly rebounded from their pre-crash level after the company reported generally positive test results and trading resumed.