Algorithmic Stop Loss Trading Behind Volatile Energy Moves

“A report from Reuters attributes the wild commodity price moves last week to algorithmic stop-loss trading.

Brown offered these details on the oil trading:

Those funds interviewed said the massive amount of stop losses that were triggered was beyond comprehension…. When the crash finally came the number of positions liquidated was staggering. As each technical level was broken it triggered more stop losses and more short selling to capture the drop….

Credit Suisse analysts said the high frequency and algorithmic trading accounted for about half of all the volume in the oil markets.”

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