Flash Crash

A flash crash is a very sharp price move, usually reversing within minutes, caused by liquidity disappearing rather than by any change in fundamentals. When resting orders are pulled and automated systems stop quoting at the same moment, even ordinary-sized orders sweep through a nearly empty book and print prices far from the prevailing market. Currency flash crashes have typically occurred in thin hours, around holidays or major news, when the usual bank participation is absent. For traders the practical consequences are extreme slippage, stops filled far beyond their level, and gap risk on leveraged positions — which is why position size and total account exposure are considered alongside where a stop is placed.