Machines get blamed for Dow's plunge
"Lightning-fast trading models, automated sell orders and an arsenal of sophisticated algorithms ... are likely to have made a crazy trading day that much crazier," the WashPost reports:
Why it matters: "The computers react to evidence exponentially faster than any human — think millionths of a second, instead of minutes — and can move en masse, trading at high volumes around the world. That makes them potentially ... dangerous."
- "If an algorithm appears to sell rashly or emotionally, analysts said, it is because a human taught it to do so."
- "Some use their mathematical speed to exploit tiny fluctuations in price, buying and reselling within a fraction of a second."
- "Others attempt to predict how markets will move by analyzing a torrent of data points, including indicators in labor-market news releases and the wording of politicians’ speeches."