There was huge and abnormal activity in Nifty Futures on 20 April 2012 around 2.40 pm, when it fell from 5338 to 5000, a drop of 7% within few seconds. Later it recovered and settled around 5250/5300. During this crash the number of contracts traded were 35,000 lots or 17.5 lakh shares. What could have happened and how can a trader protect himself from such wild swings? To start with, there could be many possibilities which could have caused this crash.The error could be due to wrong punch or entry of a sell order with a wrong quantity or price. Another possibility is that it may be due to algorithmic trading or prominently known as Algo trading, which is so programmed, that in case there is a fall below a particular price level, the algo will initiate a sell order no matter what the price is. There was also a similar flash crash in US markets in 2010, when Dowjones crashed about 1000 points in a matter of few seconds. What does this all mean for a trader? As a trader, if you are
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