Dow Jones plunged nearly 1,000 points....later found to be user error

[Romanowski]

In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points before paring those losses in what possibly could have been a trader error.

According to multiple sources, a trader entered a "b" for billion instead of an "m" for million in a trade possibly involving Procter & Gamble [PG 60.75 -1.41 (-2.27%) ], a component in the Dow. (CNBC's Jim Cramer noted suspicious price movement in P&G stock on air during the height of the market selloff.

http://www.cnbc.com/id/36999483

[guzzi]

push da budton...

[thinkingdog]

[Victor]

Originally Posted by thinkingdog

To funny!!!!

[rjb1816]

hearing on the street that this wasnt so much the problem as several large quant funds received margin calls and were forced to sell

[GFootsXtreme]

I don't understand how everybody is puzzled by this. Wasn't it Black Friday like 20 years ago that a massive sell-off occured and they said at the time OK we need to have trading curbs put in, restrict trading at a certain down level, turn off the markets if it goes down a certain amount for a while

what happened? did they not put in any of those curbs back then? how is it even possible the markets haven't considered this before and planned for it.

to the average guy out there (me), it looks like the markets took a staggering downswing and there was absolutely nothing in the system to slow that down. Wtf is that?

[rjb1816]

Originally Posted by GFootsXtreme

I don't understand how everybody is puzzled by this. Wasn't it Black Friday like 20 years ago that a massive sell-off occured and they said at the time OK we need to have trading curbs put in, restrict trading at a certain down level, turn off the markets if it goes down a certain amount for a while

what happened? did they not put in any of those curbs back then? how is it even possible the markets haven't considered this before and planned for it.

to the average guy out there (me), it looks like the markets took a staggering downswing and there was absolutely nothing in the system to slow that down. Wtf is that?

they do have trading stops in place, but the drop took place after 2pm et which the stops dont kick in after. So therefore, the market was not halted

[GFootsXtreme]

so taking this further rjb, what is the expected motive of the drop?

i get that margin calls could drop the market because someone has to sell off a ton of something to keep their account inside the margin

but when you describe it like you did, the first thing that comes to my mind is....human intervention. Someone knows exactly what you said (trading curbs don't apply after 2PM eastern in the last hour or so) and potentially exploited it knowing there would be a sell-off? is it possible or is your industry pretty much sure it was not manipulation? i don't say this as a conspiracy...the markets are about one thing, making money. is it possible or likely?

[rjb1816]

Originally Posted by GFootsXtreme

so taking this further rjb, what is the expected motive of the drop?

i get that margin calls could drop the market because someone has to sell off a ton of something to keep their account inside the margin

but when you describe it like you did, the first thing that comes to my mind is....human intervention. Someone knows exactly what you said (trading curbs don't apply after 2PM eastern in the last hour or so) and potentially exploited it knowing there would be a sell-off? is it possible or is your industry pretty much sure it was not manipulation? i don't say this as a conspiracy...the markets are about one thing, making money. is it possible or likely?

i dont think it was manipulation...i do think it was a lot of stop loss orders hit, and levels triggered and then automatic trading did what it was programmed to do which was sell. once people realized what was going on, you saw the market bounce back up about 600 points in 15 minutes

[GFootsXtreme]

so then for the rookie like me on this stuff the issue is that because there are automated stop losses, once a big drop occurs in the market one of the risks is that automatic sell-offs occur and create a cascading effect that gets worse and worse

thanks rjb that was really helpful for me. not often in the forum that you just get good information, that was very cool thanks.

[rjb1816]

Originally Posted by GFootsXtreme

so then for the rookie like me on this stuff the issue is that because there are automated stop losses, once a big drop occurs in the market one of the risks is that automatic sell-offs occur and create a cascading effect that gets worse and worse

thanks rjb that was really helpful for me. not often in the forum that you just get good information, that was very cool thanks.

yes that is essentially what happened. in addition to the automated orders, the huge drop caused investor panic...whenever you see the dow falling like that your first thought is "i'm losing money i need to get out", which spurs more selling from average investor accounts as well as institutional. this was one of the drawbacks of the technological advances of trading...also the reason you saw erroneous trades being booked for stocks with value of 50 that had trades posted at .00 or .01 a share. computers do what they are programmed to do and if something goes wrong its really hard to correct right away due to how efficiently fast they are designed to execute

[GFootsXtreme]

sent you a reward point as a small token for the good info

americans are an amazing bunch these days...nobody wants to work, everybody wants to invest and get rich quick, nobody bothers to learn anything about investing, everybody blindly invests in whatever and hopes and prays that the overall value of american business goes up so they don't have to work

call it, the american way