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Trading Catalysts: How Events Move Markets and Create Trading Opportunities by Robert I. Webb

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Chapter 10. The Accidental Catalyst

 

“We learn little from victory, much from defeat.”

 
 --Japanese proverb

The Large Cost of Small Errors

At 9:27 A.M., on December 8, 2005, a trader at Mizuho Securities Company—a prominent Japanese brokerage firm—inadvertently offered to sell 610,000 shares of J-Com, a newly issued stock, at one yen each rather than offering one share of J-Com at 610,000 yen. Given that the exchange rate was approximately 120.27 yen to the dollar, this was the equivalent of offering to sell a $5,072 stock at less than a penny a share. Although the trader quickly recognized his error and attempted to cancel the order several times, it was too late. A malfunction in the Tokyo Stock Exchange trading system, coupled with inadequate ...

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