Flash crash

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A flash crash is a very rapid, deep, and volatile fall in security prices occurring within an extremely short time period. A flash crash frequently stems from trades executed by black-box trading, combined with high-frequency trading, whose speed and interconnectedness nature can result in the loss and recovery of billions of dollars in a matter of minutes and seconds.[1]

This type of event occurred on 6 May 2010 when a $4.1 billion trade on the NYSE resulted in a loss to the Dow Jones Industrial Average of over 1000 points and then a rise to approximately previous value, all over about fifteen minutes. The mechanism causing the event has been heavily researched and is in dispute.

Two notable flash crashes have occurred as of August 2013:

References[edit]

  1. ^ Bozdog, Dragos. "Rare Events Analysis of High-Frequency Equity Data". Wilmott Journal, pp. 74-81, 2011. Retrieved 20 November 2013.