In early October, the Great Britain pound suddenly plunged at much as 6% over the course of a matter of minutes. It eventually rebounded, but it left a giant mystery in the air: What exactly caused this so-called “flash-crash” to happen? The initial theory was someone fat-fingered a trade and added a bit too many zeroes to the end of their number. Then it was speculated the crash was a reaction to the French President taking a harsh stance regarding the Brexit. Finally, it came out as a “computer algorithm glitch”. So what is the real cause?
Most recent indicators say it’s a combination of the last two. With today’s computer-run society, millions of traders use highly-specific algorithms which make trades based on everything from major fundamental announcements to opinions on Twitter. The French President’s announcement likely caused these algorithms to all converge at once and send the GBP reeling.
This flash crash caused some of the largest candlesticks since the Brexit, the wicks were even longer! What are candlesticks? What are wicks? Find out when you read this FREE Candlestick Cheat Sheet ebook!