WHAT CAUSED THE FLASH-CRASH IN SILVER?
Vince Lanci explains what he thinks may have happened on Friday when Silver experienced a flash crash in foreign exchange. The price of the metal dropped 10% and recovered in less than 5 minutes, killing a lot of LONG positions and causing a bloodbath in the accounts of margin traders. It's estimated that thousands of accounts were margin called on Friday.
The Chicago Mercantile Exchange (CME) came out and described the move as a ‘glitch’ but many experienced traders are not happy with this explanation. Vince Lanci reckons that the problem is with high frequency trading.
A marketplace where high frequency trading is allowed to be used to be predatory. This is by no means an attack on the CME because they’re doing everything they can to mitigate a situation that is really out of control.
Having said that, he is still bothered by the fact that exchanges and regulatory agencies are not preventing these types of moves from happening in the marketplace, but rather just reacting to them.
We know these things exist. We know they’re out there and they’re killing the markets. So the exchange has allowed an infection inside of it in my opinion and it's war.
WHAT SAY YOU?
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