Flash Crash Addendum

Oil crash pits floor veterans versus computer algorithms

By David Sheppard, Emma Farge and Jonathan Spicer, Reuters

Fri May 6, 2011 6:31pm EDT

The way prices move has changed with trading practices. Lightening-fast, algorithmic traders, known as “black box” players, have multiplied in recent years. Many used to trade open-outcry, yet they are viewed as the antithesis of the old-fashioned pit trader.

Manoj Narang, CEO and chief investment strategist of Tradeworx, a hedge fund that also runs a high-frequency unit, called Thursday a “great day” for his fund, which trades commodity-linked Exchange Traded Funds (ETFs) and stocks.

Narang said that unlike Wall Street’s “flash crash” last May, automated trading was not behind oil’s plunge. Instead, he cited traders who had gone long-commodities and short the dollar, but were caught out when the U.S. currency bounced up.


  1. ETFs could replace derivative exotica in the next great crash.

    Meanwhile, food prices continue to rise around the planet. Tend your garden well.

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