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Comment by kyro | Hacker News Reader

So what is it then?

"A possible culprit for the drop was a trader error in which someone entered a "b" for billion instead of an "m" for million in a trade. Multiple sources confirmed the report to CNBC and CNBC.com"

http://www.cnbc.com/id/36998463

That sounds hard for me to believe, but thats one rumor. That wouldn't account for the 10% drop but it might have put initiated the drop and then caused other people (and computers) to panic and sell.

Considering that the volume on Proctor & Gamble trading today not only does not include a spike of a billion shares sold but does not look different from relatively recent trading days, I'd chalk this one up to just a rumor and nothing else.

Today's chart does show a spike down to $50 or so, maybe even lower. Go to finance.google.com and look at the intraday chart. It also shows a volume spike, but curiously that's later.

[Edit] Actually the stock was down at $39.37 from $61. On normal days PG barely moves at all.

There's undoubtedly a price spike. But to confirm or deny the s/million/billion/ explanation we are looking for a volume spike at the same time.

Don't forget all the derivatives linked to the price. You don't see that volume or the losses caused by that.

It depend on the resolution of the chart. If the resolution is minute-based, then it could have hit $0 then come back up to $39 within a minute. You wouldn't know. You'd have to have a special high-resolution stock feed.

Yes, but I would expect that the low and high for the day shown on the finance websites does show everything down to tick level. Not real time of course.

Doesn't that kind of software have annoying dialog boxes saying "Are you sure you want cause financial meltdown?"? Or at least a less intrusive "Did you mean 'm'?"?

It probably should.

I think the first one is actually the better choice.

It's really surprising, assuming this is really the cause, that a single letter typo could have such an effect and this has 1) never happened before and 2) not been caught in testing.

Stuff like this does happen now and again. One example is putting the wrong value in the wrong fields -

http://news.bbc.co.uk/2/hi/business/4512962.stm

In the above case the trader got the price and number of share fields confused.

More than likely it is a cover story they hope will catch on enough to either cover the panic, or the real reason.

I will tell you what though - someone... someone, made a lot of money from this. Inadvertently, but more than likely otherwise.

I doubt it's a person that made money. Usually individual investors lose big time when stop loss orders are activated, it's the institutional investors that win.

No.

I have actually worked on such software. When a price comes in - a quote - you have a fixed amount of time to respond before it goes stale, usually a few seconds. It's assumed you know what you're doing and that you want to move quickly. Same as operating any other high-powered machinery.

I remember a feature request from a client of ours, we had keyboard shortcuts of k for thousand, m for million and b for billion. They wanted t as well.

> That sounds hard for me to believe, but thats one rumor.

Would this rumor create insane profits for some? If that is so, those getting the profits should be investigated. Some employee could have been promissed a large sum in a off-shore account to enter a 'b' instead of an 'm'. It should look like an 'oops' to everyone else while a bunch of HFT algorithms could rake in serious profits as everyone's stop-loss triggers get hit. The employee might get fired, but he the pay-off was large enough, he might not need to work ever again.

"That wouldn't account for the 10% drop"

Welcome to the world of positive feedback loops, enjoy your stay.

Rumor was that someone at citi fat fingered 16 billion of eminis instead of millions. Even if it were true, it would not cause as much as a dent in it. Market was on a sliding selloff already. My suspicion was that this was a manipulation or HFT gone wild or both. If there weren't that spike down, dow would be at -5% easily, but what happened was -9 and then up to -3.

That'd be some mighty fat finger to hit the b and not the m... without hitting the n.

The Dow Jones is made up of only 30 stocks. A $20 move in P&G would have a large instantaneous impact on the index which could then trigger the algorithms to go nuts.

mille mille vs. mille mille mille? http://news.ycombinator.com/item?id=1321405

Don't they enter the number itself, i.e. 1000000 instead of 1000000000. Doesn't seem so easy to get wrong.

per mschwar99 below

CNBC: Trading Error at Major Firm Blamed for Market Plunge: Sources (Story Developing)

Honestly, if you don't know that CNBC is to the financial markets as what the Hee Haw is to the news, then I can't help you.

CNBC does NOT know what the cause of this was. The exchanges will come out with some "computer glitch" story or the "fat finger" excuse, but neither of those are true. FWIW, the fat finger excuse is, in a nutshell, some trader accidentally pressing the wrong button on the trading desk.

The market was at a technical support level with various moving averages, timelines, etc. all coming into play. Many people had/have stop losses because the market was/is looking due for a correction. Algo/HFT pounced on this, collectively, and thus the massive drop.

Trust me, if you are buying into what CNBC tells you, you are really missing the truth...

Of course HFT is not the root cause, it might have burned the fuel(stops) when acceleration approached terminal speed. However last tuesday and even before that VIX was on record heights and it pushed even higher today. No fat fingers then. Market is trying to tell us something, obviously. Cumulation was there, this was just a first in a series of explosions triggered by one reason or the other (greece/eu/trichet inaction today).

DON'T PANIC

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