Navinder Sarao – The Genius Who One-upped The Quants (Flash Crash)

Had it not been for the events of May 6, 2010 – in what became known as the ‘Flash Crash’ – it is unlikely the astounding exploits of Navinder Singh Sarao would ever have become known to the public.

As a young man with a degree in computer science and a general disdain for social conventions, Sarao’s lifestyle and mannerisms bore virtually no resemblance to that of hedge fund tycoons on the other side of the Atlantic.

However, the reality is that from his bedroom in suburban London he routinely placed and canceled orders reaching the tens of millions of pounds.

His trading style can best be described as a 21st Century incarnation of Jesse Livermore: he relied heavily on intuition and on his ability to ‘read the tape,’ except that in Sarao’s case this took the form of predicting market movements based on the order book.

All he ever needed was the order book and a price chart to be able to predict which way the market was going to move and to profit handsomely from it.

This strategy propelled him to a net worth of $1 million after starting from virtually nothing just five years prior.

What’s more, while he didn’t know who was on the other side of the trade, this important threshold was attained during a tête-à-tête with famous rogue trader Jérôme Kerviel.

As his net worth grew and high-frequency traders and algorithms proliferated, so did his techniques grow in complexity.

He had a series of custom functions added to his trading software, giving him the ability to place and cancel orders in the blink of an eye, ensuring his ability to influence prices without having his spoofs eaten into.

Ultimately, these types of trades turned too frequent and in such staggering amounts that they started significantly affecting prices.

This culminated in the May 6, 2010 ‘Flash Crash,’ which his trading is claimed to have had a pivotal role in initiating, albeit unintentionally.

[jackie]

Please please do more. Do you know how much genuine value you are creating? 🎉❤

[jochemw]

I read the book, this is a good summary/ video of Nav. Everytime I watch a video like this, I just can't help but laugh really hard because it's so unreal to think that his positions were larger than banks or financial institutions. He's a fucking legend. Great vid!

[hashishdalbeda]

Your making very good video man you should maybe accelerate your voice a bit but its golden content

[Dylan-zluk]

I played this vid 2x and it still slow

[lasershark]

Do you have a twitter account or email?