Mechanical Traders May Be Partly to Blame for Market Fluctuations

Friday, August 19, 2011

Stocks plummeted yesterday, with the Dow Jones Industrial Average falling more than 400 points and Standard & Poor’s 500-stock index closing down 53.24 points, at 1,140.65. The day was just the latest in a series of wild swings in financial markets in recent weeks. What's causing the severe fluctuations? We're taking a look at how "robot traders" — computers that are programmed to automatically buy or sell stocks based on a set of criteria — affect the markets. Could market woes be tied not to human worry, but to machine worry?

John O'Donoghue, head of equities at Cowen & Company, tells us about high-frequency trading and how it impacts the market.

Guests:

John O'Donoghue

Produced by:

Noel King

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