This Was A Historic Week-Markets Survive The Flash Crash

Was it a flash crash on Monday? Was it a mini flash crash? Analysts are debating what was it. GBPNZD rose 1600 pips in 1 minute then fell 1000 pips in the next minute. NZDUSD pair is known to move slow. Under normal conditions NZDUSD takes days and weeks to fall 500 pips. But this Monday, NZDUSD fell 500 pips then immediately almost recovered the loss. EURUSD rose 400 pips then fell 200 pips on Monday. Stocks and stock indexes fell. Everywhere there was panic and chaos. Small investors had no clue what was happened.  One Japanese day trader held his nerves and made $34 million on that day. When everyone was panicking, this day trader saw the market crashing and build up positions trading Nikkei futures. When the market closed he had $34 million in his trading account. This shows if you don’t lose your nerves and manage the risk well you can make a fortune in the markets. However this was an exception as most of the day traders and small investors were hit.

The queasy chaos of this week’s markets, which has rattled even Wall Street pros, appeared to hit smaller investors especially hard, leaving a fresh dent in their stock market confidence.

Millions of these Main Street investors were locked out during the crucial hour when the worst hit, just as markets opened Monday. Popular trading platforms run by TD Ameritrade, Scottrade and others ran slow or not at all as panic grabbed hold. It took just six minutes for the Dow Jones industrial average to suffer its biggest drop in history. And these investors could only watch.

So what causes this flash crash of mini flash crash? The root cause was China. Markers were jittery when the stock market in china fell. The panic spread all over the world. Computer screens were showing stock indexes falling all over. Then the rally began the next day and Dow Jones recovered almost all the loss. The other stock markets in the world followed suit. Now Chinese stocks are also recovering. Many analysts are calling this a historic week. Call it the stress test week of the global markets.

Asian stocks moved closer to erasing the week’s losses, while commodities climbed as China’s support for its beleaguered equity market and a strong U.S. growth number bolstered investors’ appetite for riskier assets.