False tweet sparks market crash via automated trading

Over the course of a few seconds in April 2013, a false tweet from a hacked account owned by the Associated Press is thought to have caused the Dow-Jones Industrial Average to drop 143.5 points and the Standard & Poor's 500 Index to lose more than $136 in value. The tweet was retweeted 4,000 times in less than five minutes. The markets recovered as soon as the fake tweet was exposed, but the "Hack Crash", as it became known, showed the need to understand how social media is connected to and monitored by the world of finance, including automated trading algorithms, whose exact workings are unknown. The Hack Crash is often discussed as a system failure, but the trading algorithms functioned as they were designed to do. In a paper, Tero Karppi and Kate Crawford analyse the crash.

https://www.sciencedaily.com/releases/2015/05/150520160141.htm

Writer: Science Daily
Publication: Science Daily
Publication date: 2015-05-20