This retail trader from the London suburbs caused a 9% market drop and made millions.
After the 2008 financial crisis, high-frequency trading emerged as a new hedge fund strategy. These traders would make millions of automated trades a day that would profit from front-running orders. At the same time, a retail investor from London named Navinder Sarao began to analyze the pattern of these high-frequency traders. He was able to reverse engineer his own automated trading bot that could profit from deceiving HFTs. One volatile day, he ran his trading strategy raking in over $950k in earnings. But when he took his profit and shut off the algorithm, the entire market crashed.
As a result of this bizarre black swan event, the SEC and Department of Justice investigated the issue and found out that Navinder was spoofing orders. The bot would place large buy orders only to cancel them and then place a sell order which deceived higher frequency trading algorithms. In the end, he wasn’t sentenced to jail time, but rather banned from trading and served a year-long house arrest.
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Keywords: Incognito Finance, Hedge fund, Bill Ackman, Carl Icahn, Flash Crash, Navinder Sarao, High-Frequency Trading, Trading Algorithm, Trading Bot, stock market, stock trading
Title: Flash Crash: This Retail Investor DESTROYED High-Frequency Trading Bots In The Stock Market #shorts #stocks #stockmarket #GME #AMC #shortsqueeze #trading #daytrading
