Business and Personal Finance Dictionary

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 

• PROGRAM TRADING
  
  Normally used by institutional investors and arbitrageurs, program trading is the purchase or sale of large quantities of stock triggered by computer programs. These programs are designed to buy or sell stocks automatically when prices hit predetermined levels. Such large and sudden trades can have a dramatic effect on the overall market. According to one theory, the stock market crash of 1987 was caused in part by program trading triggered by falling stock prices. Circuit breakers, which halt trading for a period of time when prices fall dramatically, have since been instituted by the major stock exchanges to help prevent another crash of that type.
  
  Back