Market Plunge - Human Error or Revolution of the Machines?

Market Plunge Baffles Wall Street . The stock market plunged Thursday in a harrowing five-minute selloff that appeared to be triggered by a breakdown of trading systems. After dropping nearly 1,000 points, the market rebounded but still closed down 3.2%, leaving Wall Street struggling to figure out what happened.

Triggered by a trader or a high-frequency trading system error?

I know, it is very difficult to implement a system with a meta system that controls its "decisions".

In computer-aided discrete manufacturing for example you cannot wait to measure geometrical accuracy on the finished part, you need to do it in-operation. The same thing: if you have high-frequency automated production you have produced hundreds of parts ...

In-operation operation quality assurance predicts quality from process features (automated tool life cycle planning says you how to correct a path, as complete machine modeling tells you about dynamic and thermodynamic behavior that you nee to compensate on the fly). Soft-sensing is an important approach.

Soft sensing slows down a system a bit, but makes it robust and early error detection always pays back.

If we in trading say, the fastest system wins (and not the most fast at robustness), we might fall into such traps.

If your machines make decisions in milliseconds and do not control themselves, offline is too late.