Portfolio insurance and the 1987 crash (October 1987)
Many institutions used an automated, rules-based strategy called portfolio insurance that sold stock-index futures as prices fell. On October 19, 1987, those programmed sales piled on as markets dropped, and the Dow fell 22.6% in a single day.
Regulators introduced circuit breakers that halt trading during sharp declines.
The crash became a lasting case study in how automated strategies can amplify market moves when many follow similar rules at once.
Composer automates rules-based strategies for a much larger pool of users. The 1987 episode is a reminder of what can happen when many automated strategies act in the same direction.
