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Urban Trade Breakdowns - The Flash Crash of 2010

In early 2010, people started to realize that Europe was hella strange, People worked 30 hours a week, if they bothered working at all. This was not something the hard working folk in the US and Asia had thought about since for years they could lend money to their speedo wearing asses at payday loan interest rates, which was a fucking good-ass hustle. But at some point, someone thought, hmmm can they pay us back? I mean, Germany sells cars and books and shit and so they might be good for it but what the fuck does Greece or Spain sell? I mean, even if the Fed gives us money for free if they don’t pay us back, well that would suck ‘cus what good is free money if you can’t make money selling it?
Meanwhile, back in the land of 7 month winters and taxis, some genius discovered cheap computers and was like, fuck yelling at some dickhead in a tie everyday, let’s let the computers just trade shit and we can chill in Connecticut.
Which was awesome until one spring afternoon, some old-school country club money suit decided to get in on the actions and so he programed his computer to take care of shit so he could make his tee time or fuck his secretary in peace. So he tells the computer that if the market goes down while he’s busy doing important shit, hedge his dumb money pension fund clients by selling cheap e-mini futures tied to an index (SPX) representing all these main street stocks he’s been selling to his dumb money clients. In fact, he thinks, I’ll just set it and forget it. Sell 9% based on the last minute’s trading volume, no matter what the price.
But on May 10th, 2010, that Greek shit had people a little freaked out so the market opened low and his computer started to sell. which at first was fine because other dumb money pension fund buyers were just taking the trades. And the other suits with computers were like, look at this asshole, my smart-ass HFT algo will just buy and sell his e-mini future shit all hot-potato like throughout the afternoon or arbitrage the trade disparities he created across other exchanges and we will be home for dinner.
But fuck, it turns out there are not a lot of these e-mini futures. Who knew? In fact, the HFT computers moving at the speed of light sucked them all up and with no product left to trade and no buyers to trade with, at about 2:45pm the price just tanks. The pension fund and arbitrage suits see this happen and so they bail and when the futures tank, the computers programmed to match the e-mini future price to the SPX sell to keep it real and then all he’ll breaks loose and the market drops 10% in minutes and people were like, fuck.
But the exchange where all this shit was going down knew the game was rigged and they didn’t want to crash the party because fuck, it paid like a motherfucker so long as the drinks were flowing, so they planned for this shit. They had their computer people build in a circuit breaker to stop all trading if market went down 10% which would give the dumb money pension fund suits time to catch up. Once that started to happen, the smart money algo computers see the trend and their computers start to buy. And within minutes prices get back to normal, all before Jasmin hits the stage at WLVS.


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