

The flash crash of May 6 explained - one human, thousands of algorithms involved - erikstarck
http://www.ft.com/cms/s/0/8ee1a816-cd81-11df-9c82-00144feab49a.html?ftcamp=rss

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yummyfajitas
Here is the original report. Far more useful, in my opinion.

[http://media.ft.com/cms/5b341edc-
cd80-11df-9c82-00144feab49a...](http://media.ft.com/cms/5b341edc-
cd80-11df-9c82-00144feab49a.pdf)

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erikig
You have to love the way these electronic futures (e-Mini S&P's - 50x
leveraged) are geared. One trader's 4.1bln stone in the pond triggers a chain
of ripples that causes $900+bln losses. Its gotten so extreme that "The
current average daily implied volume for the E-mini is over $140 billion, far
exceeding the combined traded dollar volume of the underlying 500 stocks." -
wikipedia

That said I don't think the problem lies in leverage. I'm sure if this Waddell
& Reed trader had tried to pull a fast one in the trading pits where they
trade the 'big boy' S&P futures (500x leveraged), the effect would have been
much more muted because fellow traders would have pinpointed the seller and
reacted accordingly. When the trades are coming in electronically, the 'enemy
is faceless'...

For some related fun listen to the squawk in the pits:

[http://catastrophist.wordpress.com/2010/05/09/ben-
lichtenste...](http://catastrophist.wordpress.com/2010/05/09/ben-lichtenstein-
sp500-pit-squawk-may-6/)

(The excitement/fear is palpable - bear in mind Ben is a professional watching
billions wasting away)

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sammcd
I'm interested in the headline, but really don't want to have to register to
read the content.

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erikstarck
Sorry, I didn't realize it was a log-in article. I didn't have to log in, got
there from Google.

EDIT: why are they (FT) doing that? Coming from Google doesn't require
registration. Coming from HN does. Weird.

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arohner
Because if they didn't, Google wouldn't crawl the article, and then users
wouldn't find it through google.

IMO, Google needs to stop that.

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erikstarck
Well, if they want the traffic from Google they have to put out the content.
Google is very clear on that and I agree with them. It just doesn't make sense
to close out traffic from other sites. A visitor is a visitor is a visitor,
coming from Google or not.

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arohner
According to "suit logic", it absolutely makes sense. hey're trying to upsell
the visitors. Whether that's actually profitable, I don't know.

They want to have it both ways: have google crawl and report there's a page
there without registering, and then try to upsell the humans that come by.
It's sleazy.

