Two ways off the top of my head, both mentioned in the article:
Arbitrage: balancing the prices between exchanges. This helps settle all exchanges on the market price, so you don't pay $5 more just because of the exchange you're on.
Market making: By placing both bid and ask orders, algorithms can tighten the bid-ask spread around the price. When the spread is too large, people are disincentivized to trade because neither buyers nor sellers can agree on a common price.
I would guess that day traders lose out, since they miss the opportunity to act on many of these same opportunities. Also I've heard index funds lose several basis points to HFTs when rebalancing.
Arbitrage: balancing the prices between exchanges. This helps settle all exchanges on the market price, so you don't pay $5 more just because of the exchange you're on.
Market making: By placing both bid and ask orders, algorithms can tighten the bid-ask spread around the price. When the spread is too large, people are disincentivized to trade because neither buyers nor sellers can agree on a common price.
I would guess that day traders lose out, since they miss the opportunity to act on many of these same opportunities. Also I've heard index funds lose several basis points to HFTs when rebalancing.