In the industry algorithmic trading does not equal trading with algorithms. Algorithmic trading is typically used by sell-side firms to place large orders into

In the industry algorithmic trading does not equal trading with algorithms. Algorithmic trading is typically used by sell-side firms to place large orders into the market. The algorithmic part comes from how the computer places the orders. The algorithms are used to benchmark the order placement against some known value, for example two common algorithms are Volume Weighted Average Price (VWAP) and Time Weighted Average Price (TWAP). The sell side wants to get the order into the market and by using algorithms they want to reduce the impact that order has on the price. By doing this, they can fill the client order at a better average price than if they just simply placed a large market order to buy or sell. Algorithmic trading, as described above, is not high-frequency trading. They are not remotely similar. Just because computers are used to manage the order flow into or out of the market does not mean they are related. It is important to note that the conclusions here are very close to what the gut reaction of the market was the day of and after the event. A fat fingered order. This is the algorithmic execution equivalent of a fat fingered order. The order, which was huge, hit the market too quickly and didn't manage its impact. Whether there should be rules to stop this from happening again who knows, but the theories around computers fighting it out and high-frequency firms manipulating the market have been clearly deemed false.