[Alberta's Child]

It has been said that this was the reason for the great depth of the crash of 2008. A lot of trading programs (computer algorithms) had "stop loss orders" which when triggered caused the entire market to race to the bottom in an effort to trade out.

I'm not so sure about that. I believe computer trading is suspended after the market drops by a certain margin to avoid this very scenario.

[RoosterRedux]

Th theory, you are correct...but since nearly ever thing is now traded by computer, I am not exactly sure how the trading suspension rules operate and how consistently they operated over various exchanges.

That said, suspension still is triggered by a big percentage loss and the losses of 2008 and 2009 still occurred despite the use of trading suspensions, halts, and stops.