CHART: Did A Computer-Driven 'Flash Crash' Cause Today's Big Dip On The ASX?

A technical analyst has blamed algorithmic traders for the Australian stock market’s slide and dramatic recovery this morning.

The ASX200 slid more than 1.5% to 4684.20 this morning, after sliding 2% following Ben Bernanke’s economic update yesterday.

The market recovered sharply just before 10.40am and closed at 4738.80 – 0.4% below yesterday’s close.

Adam Maxey of advisory iQuant Systems described today’s fall and subsequent recovery as a controlled “flash crash”, driven by high-frequency trading algorithms that quickly switched to the buy side when prices reached a trigger point.

He argued that algorithmic trading added unnecessary volatility to markets.

iQuant Systems provides trading advice to retail investors and stockbrokers based on its analysis of high-frequency trading patterns. It launched early this year; Maxey declined to disclose client numbers.

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