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Tweet From Hacked AP Account Causes High Freq. Traders To Drop DOW 150 Points

Posted by Soulskill on from the our-culture-will-eventually-collapse-due-to-an-errant-tweet dept.

New submitter Mike Lape writes "Stocks plunged and recovered within minutes after the hacked AP Twitter account sent out a tweet that indicated that the White House had been the victim of an explosion and that President Obama had been injured. '...the Dow Jones Industrial Average took a quick 143-point plunge, before recovering most of its losses within minutes. The three-minute plunge triggered by the tweet briefly wiped out $136.5 billion of the S&P 500 index's value, according to Reuters data. Interestingly, Tuesday has been the best day of the week for the blue-chip this year with an average return of 0.46 percent. If the index closes in the black today, it will have been up for the 15th consecutive Tuesday. The last time the Dow rose for 15 straight Tuesdays was in 1927.' An analyst said, 'That goes to show you how algorithms read headlines and create these automatic orders – you don't even have time to react as a human being.'"

6 of 314 comments (clear)

  1. First for banning HFT by Anonymous Coward · · Score: 5, Insightful

    It serves no purpose.

    1. Re:First for banning HFT by interkin3tic · · Score: 5, Insightful

      How about we emphasize that it hurts productive industries and threatens the stability of the economy, rather than just say it serves no purpose. We don't want to discourage it simply because it doesn't help anyone but a few people, we want to discourage it because it HARMS the rest of us.

    2. Re:First for banning HFT by tnk1 · · Score: 5, Insightful

      And it probably does do that... but the stabilization is probably offset entirely by the strategies that the HFT algorithms use. In short, many of them are playing a meta-game of "this line will do that because lines usually do these things", as opposed to: "this looks like a good investment because it has good revenue and solid assets".

    3. Re:First for banning HFT by Anonymous Coward · · Score: 5, Insightful

      But in this case, the HFT lost money while everyone else made money (those who bought at the cheaper prices). This may be a reason not to use HFT, but it's no reason to ban it.

    4. Re:First for banning HFT by Anonymous Coward · · Score: 5, Insightful

      That goes to show you how algorithms read headlines and create these automatic orders

      No they don't. That would be the most stupid trading strategy ever imagined, you would loose your shirt in less time than you can say "Goolge translate".

      What happened is that actual people reacted to the news and the trading algorithms (not necessarily HFT, but trading bots) thought they hit a pattern and amplified the movement. Nobody lost anything except the bot herders that sold at -150 because they trusted their bots. I really can't see how that "hurts productive industries and threatens the stability of the economy" as you say.

  2. Thanks. by Fuzzums · · Score: 5, Insightful

    I want to thank the stock market, once again, for fucking, I mean speculating with my, no, our economy.
    Traders don't give a shit. The man in the street gets fired because stock prices need to go up and up and up and then - oh surprise - they crash.
    My world can do without stock market.

    --
    Privacy is terrorism.