The Masters of the Universe were at it again, and threw the New York Stock Exchange into turmoil with their computer generated Casino trading programs. Computer generated trading is a disaster waiting to happen. Some say that 40% of all the trades on Wall Street are generated by a computer algorithm. This is absolute insanity! From cyber terrorists, to incompetent fools, to hardware glitches... there are so many things that can go wrong and crash the worlds stock markets in a matter of minutes that it's hard to imagine.
Well, apparently Knight Capital Group had a computer algorithm go off the deep end this morning and started making all kinds of trades. Here's the highlights from the NYT.
Volatile trading unsettles markets.
United States stock markets were thrown into turmoil on Wednesday morning after more than 100 stocks were hit with a surge of volatile and unexpected trading immediately after markets opened.
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Many of the nation’s most popular stocks were among those that saw extreme price swings, including Citigroup, Bank of America and American Airlines.
Traders immediately pointed fingers at one of Wall Street’s most powerful brokerage firms, Knight Capital Group, speculating that a “rogue algorithm” kept buying or selling millions of shares of companies for 30 minutes, sending their shares soaring or plunging.
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The event draws renewed attention to the increasing fragility of the United States stock markets as they have grown more fragmented and reliant on high-speed-trading firms like Knight. The volatility recalled the so-called flash crash of May 6, 2010, when the entire American market dropped nearly 10 percent in about a quarter of an hour.
The trading problems took place on the same morning that the New York Stock Exchange introduced a new program, the Retail Liquidity Program, that is set to bring it into competition with Knight for orders from retail investors. The program created a platform where orders from ordinary investors to buy and sell shares can be sent to receive a slightly better price than the publicly listed price.
One of the biggest problems with this BS computer trading is, once one computer goes crazy, it could set off all kinds of buy and sell signals from other computers that are monitoring the trades. This is insane.
This is nothing more than a Cyberdyne Systems Skynet program (from the terminator movies) that is running lose on the worlds stock markets, and I suspect will have the same results for our economy as the movie had for humanity.