Fat Finger Reverses Stock Market Slump

from the fat-finger-fat-profits dept

The stock market has been taking a pounding over the past several sessions, but yesterday's action brought some relief as the major indices surged towards the close. There was no obvious catalyst for the move, although late-session reversals aren't all that rare. So, should investors be relieved that buyers stepped into the market? Not necessarily -- it would appear that the late really was simply caused by a so-called fat finger error. Basically, a trader at a major Wall Street firm messed up on an order and then had to do some major buying in order to cover for the mistake. Other traders, recognizing the situation, piled on, taking advantage of the sudden buying panic. These type of human errors happen from time to time, sometimes with great significant consequences for the offending firm or trader. In 2005, one such error at a Japanese firm ended up costing $251 million. This time, the consequences probably won't be so severe, although it still seems like it would be a good idea to develop some better preventative controls.
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Filed Under: trading


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  • identicon
    Xanius, 2 Aug 2007 @ 1:01pm

    Pop-up confirmation for stock traders

    You have requested to sell 251,000,000 shares of a stock you don't own.
    Please confirm.
    Type I am an idiot for yes or No.

    reply to this | link to this | view in chronology ]

  • identicon
    Brutus Beefcake, 2 Aug 2007 @ 1:29pm

    "Are You REALLY REALLY REALLY Sure You Want to Exe

    DOH!

    reply to this | link to this | view in chronology ]

  • identicon
    Travis, 2 Aug 2007 @ 1:31pm

    Re: Pop-up confirmation for stock traders

    It sounds like he was shorting a stock, which means actually was selling shares he didn't own.

    It's Sell High, Buy Low, as opposed to Buy Low, Sell High.

    reply to this | link to this | view in chronology ]

  • identicon
    Brutus Beefcake, 2 Aug 2007 @ 1:31pm

    Damn subject length limits

    Should read "Are You REALLY REALLY REALLY Sure You Want to Execute this Trade"

    reply to this | link to this | view in chronology ]


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