That crash was actually triggered by an unnamed investor using a computer algorithm, which sold a large number of futures contracts in a short period of time.
"When you're playing with algorithm software, it's very important, obviously, to dot your "i"s and cross your "t"s before you let those algos go," said Dennis Dick of Premarketinfo.com, a trader and market structure consultant with Bright Trading. "A lot of these are probably key stroke errors. One mistake can happen very quickly and be very costly. A computer can send thousands per second."
While the "flash crash" of 2010 was the most disruptive, smaller trading glitches made their mark in 2012. The botched IPOs of the BATS exchange and Facebook(FB) highlighted the frailty of markets in a high speed trading world.
Knight Capital, a market middleman that buys and sells stocks, also experienced a high profile trading glitch last August. The firm lost $440 million after a software snafu affected trading activity in nearly 150 NYSE-listed stocks. Knight Capital was eventually bailed out by investors.