Flash crashes
Flash crashes are growing more prevalent, although they are still poorly understood. We explain how flash crashes might occur, look through some prior cases, and examine if they can be avoided in the future.
A flash collapse occurs when the price of a security – a currency – falls fast over a short period of time before rapidly recovering.
Although some investors like it, the importance of volatility in trading cannot be overstated. And, in the digital era, when trading between people is being replaced by computers trading via algorithms aimed at benefiting by executing millions of automated orders at razor-thin margins, volatility is becoming increasingly important.
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