Thursday, 12 September 2013
Faults in computer systems
A fault in automatic stock trading software cost Knight Capital a reported $440m. The software was based on an incorrect algorithm which bought stocks at the market price and then sold them seconds later at the bid price which was a few cents less. The exercise lasted for 45 minutes and the rapid trades pushed the market price up creating a larger spread between the market price and the bid price making the problem worse.
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