Flash crash

A flash crash is a very rapid, deep, and volatile fall in security prices occurring within an extremely short time period. A flash crash frequently stems from trades executed by black-box trading, combined with high-frequency trading, whose speed and interconnectedness can result in the loss and recovery of billions of dollars in a matter of minutes and seconds.

Flash crash occurs when there is a very rapid, deep, and volatile fall in security or financial instrument prices within an extremely short time period. Flash crashes frequently stem from trades executed by black-box trading, combined with high-frequency trading, whose speed and interconnectedness can result in the loss and recovery of billions of dollars in a matter of minutes and seconds.

Four notable flash crashes have occurred as of October 2016^[update]:

This type of event occurred on May 6, 2010. A $4.1 billion trade on the resulted in a loss to the Dow Jones Industrial Average of over 1000 points and then a rise to approximately previous value, all over about fifteen minutes. The mechanism causing the event has been heavily researched and is in dispute. On April 21, 2015, the U.S. Department of Justice laid "22 criminal counts, including fraud and market manipulation" against Navinder Singh Sarao, a trader. Among the charges included was the use of spoofing algorithms.

On April 23, 2013, the AP's Twitter account was hacked to release a hoax tweet about fictional attacks in the White House that left President Obama injured.

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