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I visited the CME last August and a former trader who was observing the
S&P 500 pit with me that day explained to me about the hand signals and
mentioned the recorders as well. The best that I could understand what
was going on from his help and by watching was this. There were several
traders who were very active and at the time where the current market.
There were many other traders who were watching the action or the
broader market but did not trade as much. There was a recorder, that was
perched above the pit, who was recording the bid & ask and volume based
upon the traders hand signals and yelling. When things get real crazy
the recorder sometimes can not keep up, so they do the best they can by
keeping track of the action that represents the current market. (This is
what the trader told me.) So in the example that the gentleman discussed
about seeing the ticks go from .10 to .50 at times would mean that yes
there may very well of been trading at .20 and .30 and .40 but the
action went so fast the the recorder had hit .50 to keep up with the
market.
The two day I was at the CME, it went limit down 3 times on the second
day.
Harley
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