Strawberry Blonde's Market Summary: The New Threat to Markets...Cyber Attacks on Social Media Accounts

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Tuesday, April 23, 2013

The New Threat to Markets...Cyber Attacks on Social Media Accounts

Equity markets plunged in a matter of a couple of minutes today (Tuesday) after a "bogus" tweet was made from a hacked Associated Press Twitter account.

THE THREAT & THE PROBLEMS

How will fund managers, as well as the "average investor," hedge against this new risk in the current environment where we've seen increasing incidents of cyber attacks around the world?

Those already in the market who have a stop loss set on their trades (within the ensuing price spike) will be taken out by "High-Frequency Algorithmic Trading" (and not necessarily anywhere near the price of their stop loss, but it could be much lower), and those who don't are at the mercy of market reaction to the HFT trades.

Reality bites...