The October 2016 sterling flash crash happened in the thinnest hour of the day
Posted: Sat Oct 31, 2026 10:31 am
In the early hours of Asian trading on 7 October 2016, GBPUSD fell by roughly nine percent in a couple of minutes before recovering most of it. The move took place at a time when London was asleep and New York was closed.
Several factors were reported by later analyses: thin liquidity at that hour, automated sell orders triggered by news headlines, stop orders feeding the move, and quote withdrawals by market makers who stepped away as volatility rose.
For anyone trading, the lessons are practical. A stop is not a promise in a vacuum. Orders in the quietest hours of the day carry the largest tail risk. And the price that appears on a chart during a flash event may differ across brokers, so some traders had fills at levels others never saw.
Brokers handled the aftermath differently. Some cancelled trades at extreme prices, and others honoured them. Terms and conditions mattered then, and they matter now.
Leaving positions with stops in a thin overnight market isn't always dangerous. Over many years, nothing happens. The point is that when it does, the size of the move can be outside any normal planning.
Does the broker's agreement say what happens to trades executed during an extreme, erroneous price event?
Several factors were reported by later analyses: thin liquidity at that hour, automated sell orders triggered by news headlines, stop orders feeding the move, and quote withdrawals by market makers who stepped away as volatility rose.
For anyone trading, the lessons are practical. A stop is not a promise in a vacuum. Orders in the quietest hours of the day carry the largest tail risk. And the price that appears on a chart during a flash event may differ across brokers, so some traders had fills at levels others never saw.
Brokers handled the aftermath differently. Some cancelled trades at extreme prices, and others honoured them. Terms and conditions mattered then, and they matter now.
Leaving positions with stops in a thin overnight market isn't always dangerous. Over many years, nothing happens. The point is that when it does, the size of the move can be outside any normal planning.
Does the broker's agreement say what happens to trades executed during an extreme, erroneous price event?