Posted in Finance, Accounting and Economics Terms, Total Reads: 500
Definition: Fat Finger Error
Fat Finger error also known as fat finger syndrome is a term used in electronic trading to refer to human error caused by pressing the wrong key on a computer or entering a wrong data. It is usually a small typo like entering an extra zero, but may have out-sized consequences in some cases. Fat fingers have the worst consequences in case of a financial transaction.
For Example – A trader using a computer terminal may enter the wrong amount of stock being bought or sold leading to a market wide panic as other investors may speculate that the investor who traded large volumes in a particular stock has some additional knowledge. Such errors may also lead to blowing up of traders account
One of the consequences of Fat Finger error seen in recent times is the rattling down of Japanese Stock by $617 bn. It was reported that an order amounting to $617 billion was first ordered and then cancelled leading to huge losses.