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Program trading

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Program trading is the use of computers in stock markets to engage in arbitrage and portfolio insurance strategies.

Through the 1970s and early 1980s, computers were becoming more important on Wall Street. They allowed instantaneous execution of orders to buy or sell large batches of stocks and futures.

The most popular explanation for the 1987 crash was selling by program traders. Many blamed program trading strategies for blindly selling stocks as markets fell, exacerbating the decline.

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