It is yet more sophisticated for some HFT trading.
Continuing the analogy:
Some trading is as if there's a person standing between the two people trying to make a deal and can hear the offers before each party can react and then make their own offers to each party to capture some of the difference (re: HFT profit).
Explanation: In some forms of HFT the key advantage is that they can buy the market data faster than other people so they can see upcoming trades before other participants (undoubtedly there are better citations but here's a decent NYT article): http://dealbook.nytimes.com/2010/06/11/opening-up-the-market...
Continuing the analogy: Some trading is as if there's a person standing between the two people trying to make a deal and can hear the offers before each party can react and then make their own offers to each party to capture some of the difference (re: HFT profit).
Explanation: In some forms of HFT the key advantage is that they can buy the market data faster than other people so they can see upcoming trades before other participants (undoubtedly there are better citations but here's a decent NYT article): http://dealbook.nytimes.com/2010/06/11/opening-up-the-market...