{"id":29513,"date":"2018-01-08T21:10:43","date_gmt":"2018-01-09T02:10:43","guid":{"rendered":"http:\/\/olduvai.ca\/?p=29513"},"modified":"2018-01-08T21:10:43","modified_gmt":"2018-01-09T02:10:43","slug":"the-day-i-found-out-it-was-all-rigged","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=29513","title":{"rendered":"The day I found out it was all rigged"},"content":{"rendered":"
\"\"<\/div>\n

The day I found out it was all rigged<\/a><\/h3>\n
\n
<\/div>\n<\/div>\n
\n

May 6, 2010 started off as a pretty boring day.<\/p>\n

The most exciting stories from the morning\u2019s newspapers were reviews of the upcoming Iron Man 2 film.<\/p>\n

But all that changed at around 2:45pm when, without warning, the stock market crashed, and the Dow Jones Industrial Average dropped 1,000 points within minutes.<\/p>\n

It was unprecedented\u2026 especially because there was absolutely no reason why stocks should have fallen so much.<\/p>\n

It\u2019s not like Apple had declared bankruptcy, or the Central Bank had jacked interest rates up to 50%. Up until that point it had been pretty quiet in the markets.<\/p>\n

As it turned out, the reason behind the crash was that the investment banks\u2019 fancy trading algorithms had gone completely haywire.<\/p>\n

Several of the largest banks had developed autonomous software that was capable of trading billions of dollars without the need for human beings.<\/p>\n

And at 2:45PM that day, their software started to fail\u2026 inexplicably selling stocks to the point that prices collapsed nearly 10% in minutes.<\/p>\n

They called it the Flash Crash<\/em>, and, even though stocks had largely recovered by the end of the day, the banks lost an enormous amount of money.<\/p>\n

Then something interesting happened. Within a few days, the major exchanges announced that they would CANCEL many of the trades that took place during the Flash Crash window.<\/p>\n

In other words, they were handing the banks their money back.<\/p>\n

I never forgot that moment\u2026 because I received an email from my broker informing me of the news.<\/p>\n

They were canceling a profitable trade that I had placed during the Flash Crash window, effectively giving it back to the banks.<\/p>\n

When the banks\u2019 trading algorithms performed well and they all made money, the profit was theirs to keep.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The day I found out it was all rigged May 6, 2010 started off as a pretty boring day. The most exciting stories from the morning\u2019s newspapers were reviews of the upcoming Iron Man 2 film. But all that changed at around 2:45pm when, without warning, the stock market crashed, and the Dow Jones Industrial […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[17823,506,13350,4080,7312,2443],"class_list":["post-29513","post","type-post","status-publish","format-standard","hentry","category-economics","tag-2010-flash-crash","tag-markets","tag-rigged","tag-rigged-markets","tag-simon-black","tag-stock-markets"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29513","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=29513"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29513\/revisions"}],"predecessor-version":[{"id":29514,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29513\/revisions\/29514"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=29513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=29513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=29513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}