A flash crash is a sudden and brief market collapse, characterized by:

1. Rapid price plunge: A swift and sharp decline in asset prices, often exceeding 10% in a matter of minutes.

2. Extreme volatility: Unprecedented price swings, with trading volumes surging to extreme levels.

3. Market disruption: Trading halts, liquidity evaporates, and market participants face difficulties executing trades.

4. Unanticipated event: Flash crashes often occur without warning, catching market participants off guard.

5. Technical glitches: High-frequency trading, algorithmic errors, or market infrastructure failures can trigger flash crashes.

6. Market fragmentation: Flash crashes can be exacerbated by market fragmentation, where trading is dispersed across multiple platforms.

7. Systemic risk: Flash crashes can pose systemic risk, threatening the stability of the entire financial system.

Examples of flash crashes include:

1. 2010 Flash Crash (May 6, 2010): The Dow Jones Industrial Average plummeted 9.2% in minutes, with some stocks experiencing 90% price swings.

2. 2013 Flash Crash (April 23, 2013): The S&P 500 Index fell 1.1% in two minutes, triggered by a high-frequency trading glitch.

3. 2020 Flash Crash (March 16, 2020): Global markets experienced a sudden and sharp decline, with the S&P 500 Index falling 12% in a single day.

Flash crashes highlight the importance of:

1. Market regulation

2. Risk management

3. Trading halts

4. Circuit breakers

5. Market transparency

6. Investor education

to mitigate the impact of flash crashes and maintain market stability.