There is no evidence that HFT dissuades ordinary investors from participating in the market. The Chief Investment Officer at Vanguard, the most important retail investor in the world, has repeatedly said that HFT is an unalloyed good for them: if what you do is buy stock and hold it, all HFT does is make it cheaper to execute your orders. You can also just, you know, look at stock prices and decide for yourself whether people are avoiding the stock market.

I'm sure HFT does dissuade a class of day traders from participating in the market. But who cares? Electronic trading also killed the human market makers, who simply got outcompeted. The result, again, was an unalloyed good: the human market makers were crooked as a wallet full of 3 dollar bills.