Imagine the stock market plummeting faster than you can blink, wiping out two thousand billion dollars in mere minutes. On 5th February, 2018, the Dow Jones experienced this exact nightmare, with no clear economic reason in sight. The culprit? High-frequency trading bots, trading stocks at lightning speed, far beyond human comprehension. This is the thrilling, high-stakes world of automated trading, where milliseconds mean millions and a single glitch can trigger financial chaos. But what happens when these algorithms go rogue?

References

Brogaard, J. (2010). High frequency trading and its impact on market quality. Northwestern University Kellogg School of Management Working Paper, 66, 10.

Chordia, T., Goyal, A., Lehmann, B. N., & Saar, G. (2013). High-frequency trading. Journal of Financial Markets, 16(4), 637-645.

Paulin, J., Calinescu, A., & Wooldridge, M. (2019). Understanding flash crash contagion and systemic risk: A micro–macro agent-based approach. Journal of Economic Dynamics and Control, 100, 200-229.

Small, M., & Tse, C. K. (2012). Predicting the outcome of roulette. Chaos: an interdisciplinary journal of nonlinear science, 22(3).

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