The 2016 sterling flash crash: what did it teach you?

FTC Community TeamStaff103 views

In October 2016 sterling fell roughly 6% against the dollar in minutes during Asian hours, then mostly recovered. Thin liquidity and automated flows did the damage; stops filled at absurd prices.

The 2016 sterling flash crash: what did it teach you? — bid-ask spread diagram
The bid-ask spread on a currency pair

What's your takeaway?

  • how the crash changed your stop placement
  • whether you trade sterling in Asian hours now
  • the tail-risk rule you added after studying it
The 2016 sterling flash crash: what did it teach you? — risk-reward diagram
A risk-reward ratio of 1 to 2

The flash crash guide reconstructs the move.

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