Flash Crash
Can it happen again, and what should I do if it does?
Can it happen again, and what should I do if it does?
It was May 6th 2010, I was at work checking on a few charts, when it happened. At first I thought something was wrong with the charting service, but then I realized this wasn't a mistake, we were having a crash of electronic proportions...
To say I was in a state of disbelief would have been an understatement, but looking back the saving grace was there wasn't anything you and I could have done about it while it was happening. Had you have sold at the bottom of the of the swing, you would have missed the dead-cat retracement bounce. So what was the Flash Crash? Simply put, it was a 15 minute, 9% price swing, that put the world on edge. This rare event is still unexplained and many of the mechanisms that caused this to happen are still in place. As if investor confidence wasn't bad enough when you consider the damage of the 2008 Bear Market, now investors have to worry about this? Think about it, imagine losing 15% of your life's savings in 15 minutes flat. Just like that, gone, poof, a puff of smoke dissipating into thin air, not even the courtesy of a reach-around. So you get the point right? As I say from time to time, we can't control what happens to changes in price, we can only control how we react to those changes in prices.
Here we are a year later, have we learned anything?
http://video.cnbc.com/gallery/?video=3000020619
