What causes flash crashes? People!

Human error causes sudden stock crashes, not computer glitches, a Securities and Exchange Commission (SEC) official told Bloomberg.

We only have ourselves to blame for the increased mini-flash crashes in the last few years, including one in May 2010 when the Dow Jones Industrial Average suddenly dropped 1,000 points then rebounded minutes later.

“SEC staff found that swings in individual stocks are more often caused by human mistakes such as ‘fat finger’ trades—when a person enters the wrong number of shares to trade or some other typographical error—or incorrectly entered limit orders,” SEC Office of Analytics and Research head Gregg Berman told the news site.

Read more here.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.