Flash Crash
At 2:32 pm Eastern, a single large algorithmic sell order hit the E-mini S&P futures market. High-frequency traders, responding to unusual order flow, pulled their bids. The Dow fell nearly 1,000 points (about 9 percent) inside ten minutes and recovered most of it inside 20. The event revealed that electronic liquidity could evaporate instantly when algorithms decided, in concert, to step back. SEC rules on single-stock circuit breakers tightened later that year.
A single large algorithmic sell order triggered other algorithms. HFT firms pulled bids and the market fell into a vacuum with no buyers.
04 · Internet & Early Social
Message boards, blogs, early Twitter democratized financial commentary. Anyone with an audience could move a market. The pump-and-dump went digital.
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