How High-Frequency & Algorithmic Trading open the Floor for a Flash Crash

This is a Capital Account, web-extra from our Thursday, September 27th interview with former NYMEX board and executive committee member David Greenberg; a 25-year veteran crude oil trader. David lectures at major universities around the country and is a frequent guest lecturer for the finance program at both Hofstra University and the Whitman School of Management at Syracuse University. He also teaches a course on the transition to electronic trading at the Museum of American Finance. In this web-extra, David Greenberg (www.greenbergcapital.com) breaks down exactly how and why algorithmic trading can create price vacuums in markets that, given the right of circumstance, could create dramatic price drops unlike anything that one could expect to see in a market where sell and buy orders are filled by humans and not machines. The Flash Crash of March 2010 is a perfect example.