A mini flash crash happened yesterday on 31 May 2019

#1

Nifty crashed 112 Pts in just 1 min @11.59 am & recovered more than 112 pts in next 5 mins. Nifty fell 198 Pts (12,028 to 11,830) in just 23 mins.

@nithin @siva Is it due to a huge sell order (multi crore) in the form of long-unwinding by an institution which leads to triggering of 1000s of Stop-Losses? Or a fat finger error by institutional HFT trader?
Can you please throw some light from your experience? Did Zerodha System felt/experienced the 1 min event @11.59 am?

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#2

I too wanted to know why does this happen

#3

Not sure on the exact cause for this but yes this crash can be related to either fat finger trade or HFT acting on some misinformation. Also can check this news article which throws some info on this.

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#4

Market crosses 12000 for some time pulling in all breakout traders who enter long and keeping their Stop loss bellow the breakout level. Lots of liquidity for institutions and they make the breakout a fakeout. Happened on election results counting day as well. Breakout fakeouts are very common. Nothing unusual.

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#5

Ofcourse its stoploss hunting , but 1000 points fall is more than that.

#6

Its not normal man, everything happened in 1 minute candlestick. I dont think these things happen more than once in 2 years on average, maybe even rare.

On election day it came down gradually which is nothing new and happens many times.

#7

This is bizzare. Algos don’t “error”. Humans can error, but algos don’t because they are computer programs. If the thing happened due to algos then it was designed to happen. The immediate recovery and then Nifty goes on to cross 12k after that is no error or accident either.

#8

Not saying its not “human caused” , I am algo coder , trust me , algo can cause error .

#9

Ok, I trust you.

#10

All the big institutions are creating bizarre algos based on many inside and outside factors…

#11

It might sound strange, but these things really happen from time to time. When there are huge executions of orders than probably they will move market to one direction. Good side is that market will calm down very swiftly, the bad side is that traders can have heart attack