Skip to content
280

The Flash Crash

2 min

0$
Market value wiped in 10 minutes
0%
Stock market volume from algorithms
0% avg
Medallion Fund annual returns since 1988

On May 6, 2010, the Dow Jones Industrial Average dropped nearly 1,000 points in minutes, then recovered almost as quickly. This 'Flash Crash' wiped out roughly $1 trillion in market value in under 10 minutes. The cause: algorithmic trading systems feeding on each other's sell signals in a cascading loop. It was a wake-up call about the power and danger of AI in financial markets. Today, algorithmic trading accounts for over 70% of all stock market volume. AI systems execute trades in microseconds, analyze satellite imagery to predict retail earnings, parse social media sentiment to front-run market moves, and use reinforcement learning to develop strategies that no human trader could conceive. The profits are enormous. Renaissance Technologies' Medallion Fund has returned an average of 66% annually before fees since 1988, powered entirely by mathematical and AI models.

When AI trading goes wrong, markets can move billions in milliseconds.

Stage 1 of 6