Which term describes the 1987 crash’s computer-driven wave of automatic selling?

Program trading describes the computer-driven wave of automatic selling associated with the 1987 stock-market crash.

Many institutional investors used computerized strategies to trade baskets of stocks and futures. Portfolio insurance was designed to reduce losses by selling futures as markets fell. When prices declined on October 19, 1987, these strategies generated additional sell orders, contributing to a feedback loop between falling prices and further selling.

The Dow Jones Industrial Average dropped 22.6% that day, its largest one-day percentage decline. The crash spread internationally, showing how closely connected major financial markets had become. Explanations also include high valuations, rising interest rates, trade tensions, and market-structure weaknesses.

Program trading did not act alone, and economists still debate the relative importance of its different forms. It is also not the same as insider trading, which involves trading on confidential information. The 1987 experience helped motivate reforms such as circuit breakers and changes to trading procedures.