A stock market crash is usually defined by a drop of at least 10% on a stock exchange or major stock index within a single trading day. This usually starts within a particular sector or industry but can expand to the wider stock market, depending on the situation.
Stock market crashes are a social phenomenon that can be caused by a number of economic and political factors. ‘Flash crashes’ represent a sudden volatile fall in share prices, which tend to only last for a short period of time and don’t have a lasting impact, whereas some stock market crashes have a much longer-term effect on the financial markets. These days, the creation of electronic trading systems and the popularity of online stock trading allows investors to gain exposure to global assets, meaning that a stock market crash is much more likely to be widespread across the world.