Remember the Flash Crash?
The Trader has written on the HFT many times over the past years. Just a small reminder of the Flash Crash that occured two years ago. Via Forbes.
Two years ago, an accidental trade in the midst of a jittery market set off a cataclysmic plunge that seemed to defy all reason and pulled back the curtain on high-frequency trading for millions of investors who had no idea that computer-driven strategies account for the lion’s share of daily market volume.
That day, big-name stocks like Accenture,Procter & Gamble, IBM and a number of others traded like penny stocks. With massive plunges in a matter of seconds as the broader market cratered and the Dow Jones industrial average showed a loss of nearly 1,000 points in a matter of minutes before recovering.
The Flash Crash, as it became known in short order, prompted plenty of finger-pointing outside the financial industry and within. Congressmen and regulators made pledges to address the issues and plenty of market watchers warned that mom and pop would be scared out of the market.
There are plenty of recaps you can read on the Flash Crash (here’s one I wrote on the report regulators released on the event), but this video sums up the feeling of that day pretty well:
Full article here.