The 1987 crash that was the first major financial crisis widely linked to computerized trading was Black Monday. On October 19, 1987, markets around the world plunged, with the Dow Jones Industrial Average losing 22.6% in one session.
A major focus after the crash was portfolio insurance, a computerized strategy designed to reduce losses by selling stock-index futures as prices declined. Those sales could reinforce falling prices, creating a feedback loop. Program trading was not the only cause: valuation concerns, interest-rate changes, trade disputes, and market structure also contributed.
The crash led to reforms including coordinated trading halts, commonly called circuit breakers. These mechanisms pause trading after specified market declines, giving investors time to assess information. Because the 1987 collapse ended without a prolonged Depression, it is often studied as a market-structure crisis as well as a warning about automated selling.