Fat finger trade

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The National Stock Exchange of India detected a freak trade in weekly Nifty 50 options contact recently. It showed a loss of around Rs 200 crore for traders. Such freak trades are known as the Fat finger Trade. The current freak trade is not just one instance. India has detected such instances in past as well. What is a fat-finger trade? A fat-finger trade is a human mistake when an order is beaten. Such mistakes can contain entering a wrong value concerning price or quantity or selection of wrong execution action like buying or selling. When the freak trade is completed, the price hits an abnormal level for some second but later produces to the level where it should be. For example, in the recent freak trade, the trader managed a sell order at Rs 0.15, in the Nifty 14,500 call option. What are the Freak Trades? A Freak Trade is a trade with the error where the price hits an abnormal level for a fraction of a second and then returns to the previous level. The error may occur due to manipulations, human errors, or technical glitches. Effect of Fat-finger trade Freak trades or fat-finger trades not only result in a loss to the trader hitting the order. But it also results in a loss for others who may have put a Stop Loss order to their open positions, because Stop Losses may have got activated due to abnormal price movement. How Fat-finger trade can be evaded? The fat-finger trades can be evaded if they are caught in time. Exchanges and brokerages have been producing constan...

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Fat finger trades. What comes to mind when you see these three words? If you’re thinking about a physical error, like when you accidentally hit the wrong key on your keyboard, then you’re not far off. A fat-finger trade is just that: a trade made by mistake, usually because of a typo or some other error. In this article, we will discuss what fat finger trades are, where the term came from, and some famous examples of these errors. What is a fat-finger trade? A fat-finger trade, also known as a fat finger error, is an unintentional trade that is executed due to a mistake made with the input of orders. For example, if a trader entered the wrong stock ticker or quantity, they may have made a fat finger trade. These trades can also be made by algorithms, which are programmed to automatically place trades based on certain conditions. If there is a mistake in the code, an algorithm can make a fat finger trade as well. However, a fat finger typically refers to a manual trade that is made by a human trader. That's because humans are more likely to make errors when entering trade orders by hand. The high-speed trading scenario, Where does the term fat-finger come from? The term "fat finger" comes from the idea that these mistakes are often due to fingers being too large to hit all the buttons on a keyboard or screen accurately. Fat finger trades can have a significant impact on financial markets and often result in losses for traders. Imagine how difficult it would be to type on a ...

What is a fat finger trade? A fat-finger trade, also known as a freak trade, occurs when someone types an order incorrectly. This might involve choosing the incorrect execution action, such as buy or sell, or inputting the incorrect price or quantity. Immediately after the freak transaction is performed, the price briefly moves to an odd level before returning to its correct level. How does it affect the market? The repercussions of a fat finger error can be disastrous if committed by a person in a large brokerage firm, although the errors made by a retail investor may have little or limited impact. It is referred to as "fat finger" since the trader or broking house personnel made a mistaken buy or transaction simply because the finger clicked many buttons. In the past, when each share transaction took hours or even a day to complete, erroneous trades may not have created much harm. However, on today's computerized exchanges, a mistaken order can quickly snowball, enlisting thousands of investors as counter-parties and compelling them to purchase or sell stocks at erroneous prices. If you're a regular investor, you can find yourself on the wrong side of one due to the fact that fat finger trades typically have an effect on the entire market. However, in spite of the havoc that these fat finger errors will bring about in the market in a matter of seconds, the market and its participants remain resilient over the long term. Therefore, the effect of traders with fat fingers o...

Flash crashes, or brief price collapses, can be caused by human error. They can be caused by “fat finger” errors – referring to someone mistyping the details of a trade – and have become more common with the rise of high-frequency trading firms. In 2020, Citi accidentally wired $900m of its own money to creditors of the cosmetics group Revlon.

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