- Posted by chicagosean on May 16th, 2015 at 10:44 am
“The Flash Crash was the one event that really woke people up to the ill effects of electronic trading.”
~ Danny Riley, @MrTopStep
We recently ‘celebrated’ the five year anniversary of the “Flash Crash.”
If you, like many, have been searching for answers to the questions how? or why? or can it be prevented from happening again? – it’s been five long years with little headway.
On the afternoon of May 6, 2010 the S&P 500 fell as much as 8% and the Dow over 1000 points — in a matter of minutes — only to largely regain most of the losses by the close of trading that day. During the melee, major brand name large capitalization stocks like Accenture ($ACN) and Proctor & Gamble ($PG) saw their share prices get pummeled and trades executed at ONE PENNY per share!
Several theories of the cause of the crash were explored and debated ad nauseum:
- Was it a “fat-finger” trade?
- Was it a large hedge fund or “whale” putting on a massive directional bet?
- Is the market’s increasingly decentralized structure to blame?
- Was it the fault of a high frequency trading algorithm gone haywire?
- Was there a technical glitch at one of the exchanges?
Ironically(?) in recent days as we approached the five year anniversary of the Flash Crash, news has surfaced that is attempting to pin the blame on ONE guy, an individual operating out of his house in London executing a “spoofing” algorithm. Could this be? And if it’s true, what does it say about our ever globally-connected marketplace? Does it inspire confidence for investors?
It scares me.
In this special “Anniversary Day Episode” of The Must Follow Podcast, I interview long-time Chicago Board of Trade & CME Member and floor trading veteran Danny Riley (@MrTopStep on StockTwits). On that harrowing day, he floated in the center of this angry sea as helmsman of one of the largest order execution desks in the S&P 500 futures pit. As his ship began to take on water, the perfect storm of market risk + execution risk + systemic risk beared down on his struggling crew.
When the clouds passed and the seas calmed, Danny and his team were faced with a life-threatening gash to the hull of the ship as they uncovered an eight million dollar trading error that they would have to absorb.
This and many other great and gut-wrenching stories from the floor of the exchange with Danny Riley:
~ Sean McLaughlin, @chicagosean
An Interview with @adamhgrimes
Posted by chicagosean on May 13th, 2015 at 1:10 pm
“A trader needs to be very comfortable with himself psychologically. He needs to be driving toward an understanding of his strengths and weaknesses and his […]
An Interview with Brian Shannon, @alphatrends
Posted by chicagosean on May 11th, 2015 at 8:11 pm
“Nobody has the crystal ball. No one can predict accurately. So you have to be aware of the situation and the catalysts that have the […]
An Interview with JC Parets @allstarcharts
Posted by chicagosean on May 10th, 2015 at 10:01 am
“I made every mistake in the book. I was halfway through John Murphy’s ‘Technical Analysis of the Financial Markets’ and all of a sudden I […]
OUTR — closed (85 cents win)
Posted by chicagosean on November 25th, 2014 at 5:04 pm
11/25: Took a position in Outerwall $OUTR today based on it’s proximity to new all-time highs, a nice double-bottom pattern, and increasing volume. Was […]
DISH — closed (net gain 5 cents)
Posted by chicagosean on November 24th, 2014 at 11:04 pm
11/24: I’m a DirecTV subscriber, but I’m long $DISH and liking it. — Sean McLaughlin (@chicagosean) Nov. 24 at 02:01 PM Took a position in […]
LE – closed (55 cent gain)
Posted by chicagosean on November 24th, 2014 at 10:46 pm
11/24: My first trade anticipating a breakout in $LE ran out of time (expired – you can read about it here). But I’m still bullish […]
TERP — closed ($2.75 win)
Posted by chicagosean on November 20th, 2014 at 12:23 am
11/19: Recent IPO $TERP broke out to new all-time highs yesterday on it’s highest volume since its debut back in July, which caught my attention: […]
PPO — closed ($1.75 loss)
Posted by chicagosean on November 19th, 2014 at 5:10 pm
11/19: $PPO had an extremely nice breakout back on Nov 6. I’ve been watching it form a nice high tight flag ever since. And have […]
DXCM – closed ($1.55 win)
Posted by chicagosean on November 19th, 2014 at 12:06 am
11/18: My friend @gtlackey was generous in pointing out a trade opportunity on StockTwits in $DXCM last week. Since he mentioned it, I’ve been monitoring […]
Sean McLaughlin - Editorial, Curation, & Investor Relations Solutions at StockTwits. Also, former Member of the Chicago Board of Trade who trades his own account in Boulder, Colorado. More »
- An Interview with Danny Riley, @MrTopStep
- An Interview with @adamhgrimes
- An Interview with Brian Shannon, @alphatrends
- An Interview with JC Parets @allstarcharts
- OUTR — closed (85 cents win)
- DISH — closed (net gain 5 cents)
- LE – closed (55 cent gain)
- TERP — closed ($2.75 win)
- PPO — closed ($1.75 loss)
- DXCM – closed ($1.55 win)