Flash Crash

AAA

DEFINITION of 'Flash Crash'

The quick drop and recovery in securities prices that occurred shortly after 2:30pm Eastern Standard Time on May 6, 2010. Initial reports that the crash was caused by a mistyped order proved to be erroneous, and the causes of the flash crash remain unknown. Both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have investigated the incident.

INVESTOPEDIA EXPLAINS 'Flash Crash'

The SEC and CFTC released a preliminary report on the flash crash incident on May 18, 2010. The report gave several working hypotheses, but failed to identify a single cause for the incident. Securities exchanges canceled 21,000 trades that were executed at unexpectedly low prices during the crash. On June 10, 2010, the SEC voted unanimously to enact new rules which automatically stop trading for any stock in the S&P 500 whose price changes by more than 10% in any five-minute period.

RELATED TERMS
  1. Quote Stuffing

    A tactic of quickly entering and withdrawing large orders in ...
  2. Stub Quote

    Order placed well off a stock's market price. Stub quotes are ...
  3. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock ...
  4. Stock Market Crash Of 1929

    A severe downturn in equity prices that occurred in October of ...
  5. Stock Market Crash Of 1987

    A rapid and severe downturn in stock prices that occurred in ...
  6. Circuit Breaker

    Refers to any of the measures used by stock exchanges during ...
Related Articles
  1. Home & Auto

    Key Reasons To Invest In Real Estate

    There has been a lot of negativity over the real estate sector since 2008. Here are the reasons why you should be investing in it.
  2. Active Trading

    Connecting Crashes, Corrections And Capitulation

    Even though crashes, corrections and capitulations are bad news for investors holding the stock, there are still ways to profit.
  3. Forex Education

    October: The Month Of Market Crashes?

    In the finance world, October is a month to be feared, but is it justified?
  4. Active Trading Fundamentals

    The Fall Of The Market In The Fall Of 2008

    How did America's strong economy tumble so quickly? Find out here.
  5. Economics

    What Caused The Great Depression?

    Learn how government actions may have contributed to this major economic downturn.
  6. Personal Finance

    The Crash Of 1929 - Could It Happen Again?

    Learn about the series of events that triggered the Great Depression.
  7. A commodity is a basic good used in commerce.
    Markets

    What are Commodities?

    A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commonly traded commodities include gold, beef, oil, lumber and natural gas. Additional ...
  8. Economics

    The New Global Banking Regulations To Avert Future Crisis

    These are the types of policies that are being developed to minimize the risks posed to the global financial system by banks which are too big to fail.
  9. Venezuela has more oil than anyone, and Brazil and Argentina have lots going for them, too, so why can't they get out of their own way economically?
    Economics

    Where NOT To Invest in Latin America

    Venezuela has more oil than anyone, and Brazil and Argentina have lots going for them, too, so why can't they get out of their own way economically?
  10. How can you keep more of what you make or made when you retire? Minimize the taxes from short-term trades and taxable interest income.
    Investing

    Keeping More Of Your ETF Capital Gains And Income

    How can you keep more of what you make or made when you retire? Minimize the taxes from short-term trades and taxable interest income.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center