Nanex ~ HFT Video Games

Dear SEC, this is like playing [insert favorite mario game here], you have to keep him in the center and not touch the balls. This is how HFT trading works. Just like a game. It is a game. And no one ever gets hurt.
Thank you for your time.

Everyone else..

The green and red circles show the best bid and best offer of DGAZ. Occasionally a gray circle appears. That is a trade. Imagine that you have to sell shares in this stock, and the price you get for those shares is the price shown by one of those green dots. This is just like a video game (but with real money), and when you click your mouse to sell, your order will be sent and will execute in about the blink of an eye. One more thing, the data you are seeing is probably old by another one or two blinks worth. Don't worry, it's only money. Good luck.

When HFT people talk about tight (narrow) spreads, they are usually referring to the narrowest point between the bid (green) and ask (red) for each second. Yes, quotes change a lot, but that's what is called price discovery. HFT is trying to discover the price that causes the biggest market reaction.

The full sequence you are viewing looks like this:


How to read this sequence

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