The 2010 Flash Crash
What is the 2010 flash crash?
It is an expression that describes the events of 6 May 2010, when half an hour of trading saw $1 trillion wiped off US share values. Initially ascribed to a 'fat finger' error by someone inputting prices to a trading system, its cause has never been fully explained.
Where have you heard about the 2010 flash crash?
As an investor, you may be away that the flash crash of May 2010 has entered market folklore. The worst of the drop was concentrated in five minutes of trading, suggesting that, in future, real-life, rather than short-term and freakish, market collapses could occur at lightning speed.
What you need to know about the 2010 flash crash.
The 2010 flash crash occurred against a background of the worsening debt crisis in Greece, the continuing aftershocks of the financial crisis and Great Recession and the arrival of high-frequency trading, which uses complex computer algorithms and ultra-fast connections to give traders an edge over their rivals.
To some observers, it is obvious that these elements were stirred into a deadly cocktail that triggered the flash crash. To others, the answer is more straightforward - the flash crash was a type of old-fashioned market manipulation. Despite official inquiries and so-far inconclusive criminal proceedings, no final answer has been reached.