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Black Monday crash: A computer's downfall?

Imagine you're shopping online for a new laptop. Suddenly, the website crashes, and you can't complete your purchase. This happens because of a sudden market crash, like Black Monday in 1987.

Black Monday showed that even smart computer programs couldn't handle extreme market swings. These programs, called algorithmic trading systems, crashed when the market dropped too fast.

Example

On Black Monday, stock prices plummeted by 22.6%, and trading volume soared. Algorithmic trading systems couldn't cope with such rapid changes, leading to massive losses.

Remember this

Algorithmic trading systems have limits; they can't handle extreme market volatility.

Text adapted from Wikipedia, licensed under CC BY-SA 4.0.

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