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Was Cyberwarfare the Cause of the Flash Crash?




Was Cyberwarfare the Cause of the Flash Crash?
Was Cyberwarfare the Cause of the Flash Crash?



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http://www.advancedtrading.com/blog/archives/2010/08/was_cyberwarefa.html 

By Ivy Schmerken
Advanced Trading
Aug 24, 2010 

The clues to the causes of the mysterious May 6 flash crash are 
evidently buried in the trading data. Yesterday the New York Times 
reported that a small, obscure data analysis company, Nanex, located 
outside of Chicago, has discovered strange patterns in the stock trading 
data, which it calls crop circles. [See the NYT story: =E2=80=9COminously, Flash 
Crass Still Baffles=E2=80=9D.

Ever since the market inexplicably plunged 600 points that day and 
recovered within minutes, Nanex, a company headed by CEO Eric Hundsader, 
a former developer of real-time trading systems, has been examining 
trading charts and publishing flash crash analysis. Nanex has reportedly 
attracted Wall Street=E2=80=99s interest in the charts by giving them intriguing 
names like Continental Crust, Broke Highway and Twilight,=E2=80=9D the NY Times 
noted.

The bizarre patterns are giving rise to a theory that high =E2=80=93speed 
traders overloaded the exchanges as part of a conspiracy to slow down 
the exchanges and outsmart other investors.

One theory is that high-speed traders bombarded the exchanges with a 
fusillade of buy and sell orders that were never meant to be executed. 
They were simply trying to outwit each others=E2=80=99 computers and clog up the 
exchanges so that other investors couldn=E2=80=99t execute.

[...]


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