Everything you need to know about the 'flash crash'
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Overnight there was a “flash crash” that saw sterling endure one of the steepest falls in its history. As not all of us are well-versed in stock market lingo, here is everything you need to know about what actually happened and what it all means. What is a “flash crash”? Putting it simply, a “flash crash” is a very rapid and extreme fall in the value of a currency in a particularly short period of time. What actually happened? During the Asian trading session (so overnight for us in the UK), sterling plunged by as much as 6% against the dollar in just two minutes. The pound fell to 1.18 dollars in a matter of minutes, hitting fresh 31-year lows before recovering to 1.24. The British currency, which would buy around 1.26 dollars on Thursday, plunged past the 1.20-dollar level early on Friday before recovering minutes later and trading around 1.24 dollars. Foreign exchange “traders will have woken up this morning stunned”, said Margaret Yang of CMC Markets in Singapore. Experts are blaming algorithmic trading computers, but what is algorithmic trading?
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