Dow Drops 1000 – algos blamed (wrong!)
The Dow dropped 1,000 intraday today – and immediately calls were made that algo trading needs to be “carefully reviewed”. The problem is that the blame is being placed on a trading error – made by a human. And the markets quickly bounced back, thanks to … you guessed it, program trading.
So let’s see, a human enters a wrong trade, markets react, program trading kicks in because suddenly there are great deals available, the market pops back up.
Sounds like we should be “carefully review[ing]” human traders.
Additionally, if a CEP engine, such as Sybase’s Aleri Streaming Platform had been in place to perform some pre-trade checks on our unfortunate human trader (hey – we all make mistakes), perhaps this would not have happened in the first place – and yes – Sybase Aleri was developed primarily to speed up algo trading.