the propeller heads at work. equity markets are doomed forever. s http://video.pbs.org/video/2210555122/
Most people think of market making HFTs when you say "algos". They simply post a bid/ask before anyone else after the price moves, and then they are on both sides, so people buying at market are buying from and selling to them, thus they make a marginal profit with very low (or no) commissions. Then there are arb algos which try to determine real prices of instruments and buy/sell if there are inefficiencies. For example an algo will look at the S&P 500 stocks (tick by tick, high speed) compute them together and determine a realistic price that the ES (e-mini) should be at. They shift the price sometimes by 1 tick or so, very marginal. It doesn't make much difference for algo design if it's futures, stocks, forex or any other market, the principle is the same. There are also MFT algos which trade in the n-minute time range. Those are simply automated strategies that use a huge range of tactics for predicting prices. There is virtually an unlimited number of variations on what they do and what people come up with, but they in essence try to buy low and sell high. Most money spins in the faster ones, but some hedge funds survive with MFT and others even slower on a daily basis, etc. I haven't seen a real statistic saying how much each of those is being used and by whom, but that's approximately how it is.
Professor Kearns at U of PA did a lot of research in this area. He called it "SOBI". www4.ncsu.edu/~wurman/IJCAI-03/Papers/plat.pdf This is also a great explanation of how the exchange order "matching engines" work to provide a liquid market.
There are literally hundreds of strategies that are employed. Also, with the advent of ETFs and ETNs, the possibilities have really expanded lately.
Buy at bid sell at ask. Buy side Sells receive the bid, buys receive the ask Sell Side Sellers at the bid are paid through buying on the bid, the sell side buyer at the bid then sells to the buyer of the ask. You can make between 0.0001 to 0.05 in some cases with fighting typically in between the best bids and asks. Do that 100,000,000 times all day everyday and you'll make money. HFT.