Flash crash

Flash crash

about 5 years ago1 min

Hey there 👋 Just dropping in to share something we thought Markets Pros might find interesting.

🇨🇭 Early on Monday morning, the “Swissie” dropped almost 1% in just a few minutes. Although it bounced right back shortly after, investors were still shaken by the “flash crash”...

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The Swiss franc’s value momentarily dropped to its lowest value since November before swinging to a 0.2% increase within minutes. The drop and bounceback of 110 pips was almost double the currency’s daily average this year.

A minutes-long flash crash
A minutes-long flash crash

Investors pointed to Japan’s National Foundation Day holiday on Monday as a reason for the crash – fewer Asian buyers to meet sellers meant lower liquidity, the result of which was the Swissie’s rollercoaster ride 🇯🇵

Another reason might be a “fat finger”, according to some investors – where someone mistypes their trade into the system, causing other investors (and their algorithms) to react to the initial “sell” order – again exacerbated by thin liquidity.

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