Flash Crash

A flash crash is a sudden, rapid drop in stock or asset prices occurring within seconds or minutes, often followed by a quick recovery. It typically results from a combination of automated trading algorithms acting unexpectedly, triggered by specific market conditions or errors. During a flash crash, liquidity can vanish quickly, causing prices to plummet temporarily. While these events can be alarming, they usually resolve quickly, and markets often bounce back once the algorithms pause or are adjusted. Overall, flash crashes highlight the risks associated with high-frequency trading and automated systems in financial markets.