The same thing could happen with people, someone finds an old story but doesn't realise it's old, tells a few people, starts a rumour and then traders sell off stock. At least with an automated system you can improve the algorithms.
Yup - like the occasional trader that misses a decimal point and sends a stock whirling off in the wrong direction (most trading systems have mechanism to prevent this, but it still crops up now and then).
Whilst this is an unusual case - 99.99% of the time the access and currency of information available today actually makes for a much improved market.
"Automated trading systems start a massive stock self off based on the old headline..."
Quant firms played a very little role in the selloff. It was retail and some institutional investors seeing the headline come across on their Bloomberg terminal and immediately start dumping shares.
I use http://www.zecco.com for my standard stock trades as you get 10 free a month. Definitely not the most fully-featured broker, but it works and it's hard to argue with no-commission trades.
Damn I hate their security device though. It's kind of irritating to have to enter the security codes every time i want to make a trade. And if you're a frequent trader, it'll get on your nerve (on the flip side, it prevents over-trading)
I used to work at Banc of America Investment Services before I quit to go back to school. I can safely say that I would never do business there. Unless they have cleaned up their act in the ten months I haven't worked there, the place must still be a mess.
