“On May 6, 2010, in the course of about 30 minutes, U.S. stock market indices, stock-index futures, options, and exchange-traded funds experienced a sudden price drop of more than 5 percent, followed by a rapid rebound. This brief period of extreme intraday volatility, commonly referred to as the “Flash Crash”, raises a number of questions about the structure and stability of U.S. financial markets”.
The video is a recording of a trader from the S&P 500 futures during the flash crash on May 6 2010
A survey conducted by Market Strategies International between June 23-29, 2010 reports that over 80 percent of U.S. retail advisors believe that “overreliance on computer systems and high-frequency trading” were the primary contributors to the volatility observed on May 6”
Source: The Flash Crash: The Impact of High Frequency Trading on an Electronic Market- October 1, 2010
The reason for the the Flash Crash of may 6, 2010 still a mystery. No evidence shows that the responsible are the high frequency traders. However, the investigation conducted by the SEC and The CFT, concluded that a trading firm, which the name has not been mentioned in the investigation report, executed a computerized trade of 4.1 billion dollar. (Read more)
Some argued that the trade was not intentional, but a bug in one of the firm's machines was responsible for this heavy sell-off. On this topic, staff at Nanex, a computer programing company, made a comment on the event: : “On the subject of HFT systems, we were shocked to find cases where one exchange was sending an extremely high number of quotes for one stock in a single second -- as high as 5,000 quotes in 1 second! During May 6, there were hundreds of times that a single stock had over 1,000 quotes from one exchange in a single second. Even more disturbing, there doesn't seem to be any economic justification for this. In many of the cases, the bid/offer is well outside the National Best Bid/Offer (NBBO). We decided to analyze a handful of these cases in detail and graphed the sequential bid/offers to better understand them. What we discovered was even more bizarre and can only be evidence of either faulty programming, a virus or a manipulative device aimed at overloading the quotation system.”
Even if the name has not been mentioned on the official reports, Waddel and Reed, a investment company has been the target of many blames because of its likelihood to execute these kind of orders.
Some argued that the trade was not intentional, but a bug in one of the firm's machines was responsible for this heavy sell-off. On this topic, staff at Nanex, a computer programing company, made a comment on the event: : “On the subject of HFT systems, we were shocked to find cases where one exchange was sending an extremely high number of quotes for one stock in a single second -- as high as 5,000 quotes in 1 second! During May 6, there were hundreds of times that a single stock had over 1,000 quotes from one exchange in a single second. Even more disturbing, there doesn't seem to be any economic justification for this. In many of the cases, the bid/offer is well outside the National Best Bid/Offer (NBBO). We decided to analyze a handful of these cases in detail and graphed the sequential bid/offers to better understand them. What we discovered was even more bizarre and can only be evidence of either faulty programming, a virus or a manipulative device aimed at overloading the quotation system.”
Even if the name has not been mentioned on the official reports, Waddel and Reed, a investment company has been the target of many blames because of its likelihood to execute these kind of orders.
The massive sell-off was not the only reason that lead to the Flash Crash. The sudden injection of 4.1 billion to the stock market created a great deal of stress and panic, which lead all computers on the network to sell positions dragging the stock market down. In reaction to this, many high frequency trading firms just turned of their computers and left the office. Manoj Narang, the CEO of a high frequency trading firm, said: "Flash Crash was worst day for high frequency traders...We hit our stop-loss as the market was going down,... we turned our systems off... We did not turned the high frequency trading system on for the rest of the day "
The video is called the truth about May 6,2010 and express an opinion about the linkage of the Flash Crash and High Frequency Trading.
As a response to all the criticisms against high frequency trading, Manoj Naranj argued against these accusations during an interview conducted by Bloomberg, the content of the interview is available on the following
video
As a response to all the criticisms against high frequency trading, Manoj Naranj argued against these accusations during an interview conducted by Bloomberg, the content of the interview is available on the following
video
Hi! I read your blog. Its so nice. As we all know that the up and downs in a investment marketing online before investing on such fund companies are common.But those will not go as continuously falling or rising up.It depends on the marketing strategies.Here our Hedge Funds Company RIMAR’s multi-strategy asset management combines quantitative models, artificial intelligence and deep learning to produce algorithmic trading strategies targeted to out-perform the benchmark in a variety of market conditions while reducing volatility by enforcing a fixed, pre-defined risk level. RIMAR is NOT a High-Frequency Trader.
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