Today I Learned (TIL)

6593 readers

1 users here now

You learn something new every day; what did you learn today?

/c/til is a community for any true knowledge that you would like to share, regardless of topic or of source.

Share your knowledge and experience!

Rules

Information must be true
Follow site rules
No, you don't have to have literally learned the fact today
Posts must be about something you learned

founded 2 years ago

MODERATORS

[email protected]

351

TIL that in 2010 the stock market experienced a flash crash, caused by automatic trading. Over a trillion dollars were lost and mostly regained, all in 36 minutes. Exact causes remain disputed. (en.wikipedia.org)

submitted 1 year ago* (last edited 1 year ago) by garfaagel to c/[email protected]

36 comments fedilink hide all child comments

you are viewing a single comment's thread
view the rest of the comments

[–] bernieecclestoned 40 points 1 year ago* (last edited 1 year ago) (3 children)

They were real dollars, and this legend got house arrest for a year for helping to trip the algos limit orders, and briefly wiped 1 trillion dollars of value off the US stock market

Sarao realised that the high frequency traders all used similar software. That made the market twitchy - like a flock of sheep, all moving in the same direction

His software took advantage of this by placing thousands of orders before quickly cancelling or changing them, once he had created artificial demand for other traders to buy or sell that asset.

This practice - known as "spoofing" - allowed him to make genuine buy or sell orders at a profit as the price swiftly rose or fell

https://www.bbc.com/news/explainers-51265169

[–] [email protected] 26 points 1 year ago

Not even mad. Respect to this dude for striking fear into the hearts of the asshole class, if only for a few glorious minutes.

[–] Kecessa 9 points 1 year ago* (last edited 1 year ago) (1 children)

So the guy played with the system, doing things the system allows ,but because he wasn't in the club he got punished 🤷

[–] prole 2 points 1 year ago* (last edited 1 year ago)

A tale as old as time.

[–] [email protected] 6 points 1 year ago (1 children)

He wasn't the real cause of it though.

[–] bernieecclestoned 2 points 1 year ago* (last edited 1 year ago) (1 children)

What do you mean? There was a liquidity crunch because of a massive mutual fund order and his spoofing tripped the algos into selling

[–] [email protected] 1 points 1 year ago* (last edited 1 year ago) (1 children)

OP's article is quite good.

It's more likely that there were several factors in play, including Wadell & Reed.

But if the market practices weren't so flawed with HFTs, none of that would have caused what happened.

[–] bernieecclestoned 2 points 1 year ago

Yeah, as it says it's like blaming lightning for starting a forest far.

The current dark pool stuff is probably ten times worse.