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How to lose money - fast

10 minutes
First broadcast:
Sunday 12 August 2012

Last week Knight Capital lost a lot of money very quickly.

It was the latest chapter in the story of something called 'high frequency trading'.

Investors have always valued being the first with the news.

But high frequency trading is different - algorithms execute automatic trades, conducted by computers, at astonishing speeds.

We ask - is the rapid growth of high frequency trading progress, or – as some think – a threat to the stability of the entire financial system?

(Image: $100 bills. Credit: AFP PHOTO/Karen BLEIER)

  • High-frequency trading and the $440m mistake

    High-frequency trading and the $440m mistake

    "There was some problem with the program. We don't know exactly what. They switched it on and immediately they started losing literally $10 million [£6.4m] a minute"

    Read more on the BBC News website


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