"Never again is what you swore the time before"
There have been two major flash crashes since 2008, both unresolved...
I stand corrected. The DOJ arrested a day-trader in early 2015 for causing the 2010 Flash Crash. And while he was being incarcerated, just a few months later, a bigger flash crash took place. Proving that regulators are industry-captured uber-buffoons. No other charges have been laid.
"In parts of London’s financial community, Sarao’s arrest and indictment were greeted with incredulity, and for good reason. How could a small-time trader of limited means help to almost bring down one of the world’s biggest and most liquid financial markets? Why haven’t any financial institutions, particularly those that specialize in high-frequency trading, been brought to book? And, if the Justice Department’s theory of the case is true, what does it say about the fragility of the U.S. financial system?"
The Flash crashes were caused by stop losses set below momentum ETFs
"To make money in stocks, you must protect the money you have. Live to invest another day by following this simple rule: Always sell a stock it if falls 7%-8% below what you paid for it. No questions asked."
"Traders Magazine journalist, John Bates, argued that blaming a 36-year-old small-time trader who worked from his parents' modest stucco house in suburban west London for sparking a trillion-dollar stock market crash is a little bit like blaming lightning for starting a fire" and that the investigation was lengthened because regulators used "bicycles to try and catch Ferraris."
"Impact of high frequency traders: Regulators found that high frequency traders exacerbated price declines. Regulators determined that high frequency traders sold aggressively to eliminate their positions and withdrew from the markets in the face of uncertainty."
HFT grew exponentially when the major exchanges were privatized:
