I wonder if someone can help explain a phenomenon I noticed while watching Level II quotes on YM. I don't normally follow level II very closely so I'm not sure what to make of it.

A few times over the past day or two I've noticed times where really large bids or offers will appear just for a second, then disappear for a few seconds, then reappear just for a flash, etc. Like normally there will be between 30 and 50 contracts, then for a second the best bid is 450, then drops back to 30, then 450 again, sometimes over and over at a certain price level.

I'm trying to figure out why this would happen. Computers playing games with each other? Is there any significance to the price levels where this kind of activity occurs?

worldwary 

I wonder if someone can help explain a phenomenon I noticed while watching Level II quotes on YM. I don't normally follow level II very closely so I'm not sure what to make of it. A few times over the past day or two I've noticed times where really large bids or offers will appear just for a second, then disappear for a few seconds, then reappear just for a flash, etc. Like normally there will be between 30 and 50 contracts, then for a second the best bid is 450, then drops back to 30, then 450 again, sometimes over and over at a certain price level. I'm trying to figure out why this would happen. Computers playing games with each other? Is there any significance to the price levels where this kind of activity occurs?

I think that happen in almost all instruments, surely they are algorithms trading, probably HTF, market makers, that try to move the market in some direction, or profit fast if one of the side is hit. Sometimes that happen on a support or resistence area too.
Anyway watching the level 2 you will see a lot of different behaviors that seem 'weird'

I made this video this morning using replay data from Thursday, 3/31, at 11:30am, on oil.

I noticed quite a lot of computer activity and wanted to capture it and let anyone who knows anything about reading the DOM comment on it.