Strategy Video: What is a Fat Finger and Did USDJPY Suffer One?

By DailyFx | August 06, 2014 AAA

DailyFX.com -

Talking Points:

• A Fat Finger is a large trading error that sparks a large move in the market

• While Yen futures and USDJPY did see a big volume event, it is unlikely to fit the traditional definition

• Nevertheless, the activity boost in the Yen crosses can still have a lasting impact on the markets

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Did FX traders see a 'Fat Finger' incident with USDJPY this past session? A Fat Finger is an event where a large position is mistakenly executed - either too large or not properly filtered into the market - typically results in an exceptionally large swing in the asset that was traded. The impact that such events have can be severe as evidenced by the May 2010 'Flash Crash' in US equities. Yet, this particular development lacks some of the hallmark characteristics of traditional Fat Finger and FX markets are generally less prone to them due to the liquidity. However, there is still something to learn from the USDJPY's volatility and volume. We discuss Fat Fingers and this particular event in today's Strategy Video.

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