The New York Stock Exchange is built on incredibly quick trades. About 10 million of Johnson & Johnson’s shares are traded each day, for instance. This video shows just one half-second of those trades:
The creator of this video, Eric Hunsader, explain what you’re looking at:
Each box represents one exchange. The SIP (CQS in this case) is the box at 6 o’clock. It shows the National Best Bid/Offer. Watch how much it changes in a fraction of a second. The shapes represent quote changes which are the result of a change to the top of the book at each exchange. The time at the bottom of the screen is Eastern Time HH:MM:SS:mmm (mmm = millisecond). We slow time down so you can see what goes on at the millisecond level. A millisecond (ms) is 1/1000th of a second.
If this is confusing to you, you’re not alone. High speed trading is incredibly complicated and hard to keep up with. Radiolab has a good explanation of just how these incredibly quick trades go down.
And remember, that video is just for Johnson and Johnson, in one half-second. Imagine what the system looks like for all companies, the whole day through. It’s no wonder our financial system is hard to understand. “So much is happening so quickly that humans are uselessly for anything more than programming the computers and then sending them on their way, along with some instructions about what to do in a given scenario… and hopefully a few measures which will help avoid a global financial meltdown,” writes Geek.com.
You already have welcomed your robot overlords, and they’re building our financial system.