How to Avoid Another Flash Crash

 

A clever new approach could help monitor an incredibly complicated, increasingly automated system that thrives on secrecy.

Today marks the three-year anniversary of the 2010 Flash Crash, when the U.S. stock market lost 1,000 points in a matter of minutes before recovering most of these losses a few minutes later.

The crash occurred when high-frequency trading algorithms got into a vicious, high-speed selling spiral, wiping out billions of dollars of value before anyone knew what was happening. Some observers argue that a trading system dominated by machines rather than human beings could be increasingly prone to such calamitous crashes in future.

Perhaps algorithms can also help make the financial system more secure, though…

Read more: http://www.technologyreview.com/view/512291/how-to-avoid-another-flash-crash/?utm_source=feedly

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