Johnson & Johnson is a longstanding company that has a blue chip stock traded on the NY Stock Exchange. The firm has a market capitalization of $239.70 billion, which means it’s a rather large entity even for a publicly traded company.
JNJ’s average trading volume is 9,694,550, which means that about 10 million of the company’s shares are traded per day. This doesn’t mean that its shares are traded 9.6M times per day but, even so, they get traded very frequently. This video is a visualization that shows just how many transactions can happen in just one half of a second. As you might has guessed, it’s a lot.
The video shows the trades happening each millisecond from 9:37:56:125 to 9:37:56:655 on Thursday May 2, 2013. That’s 530 milliseconds, or just over a half a second. During that time countless (well, not for computers) high-frequency trades were made, though some of those were probably what we consider to be conventional transactions, with deals as bland as employees cashing in their bonuses and people putting their money into a dividend-bearing stock so they could save for retirement.
Those entities on the circumference of the circle — BATS, PHIL, CBOE, and so on — are the exchange operators. BATS, for example, runs the BZX Exchange and the BYX Exchange and handles about one-tenth of all US trades each day. (You might have heard of it — the company got a lot of press in January for some high-profile technology problems.) When one exchange processes a trade it goes out to all the others. Each trade much be processed perfectly, otherwise there will be pricing inconsistencies which can be exploited for unfair gains.
To get an idea of just how intense the trading is, remember that this is just a single stock. There are many others out there, and while JNJ is a large company, there are others that are more actively traded. Even so, if you go to the end of the video you will see the flurry of madness slow down to a much more understandable trading volume.
The next time you read about high-frequency trading and how a few milliseconds can make a big difference when you are trading algorithmically, this video shows you why that’s the case. 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.
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