Being an effective, profitable sit n go player isn't just about how we play the cards. It's about how we use all the information available to our advantage. What we want to do is to make life as easy as possible thus minimising the time taken and risk made from each decision during a SNG poker game.
This is even more important when playing multiple tables. Let's say you're stacking 16 tables and a player 3 bets you on the flop. You have a lot of information to take in and perhaps half the other tables awaiting your decision on those hands.
So - what is color-coding? Well, not surprisingly, this refers to assigning a color to each sit n go opponent, usually according to whether they're profitable or not, via your poker client. Thus when you're in a hand with that person, you can tell at a glance roughly what sort of player they're like.
Hopefully you're also running poker software like Holdem Manager, which will also give you (via the HUD) data like PFR and VP$IP for that player. Color-coding is a simple but effective way of categorizing your opponent so you make decisions more quickly.
This helps not just in hands post-flop, but also pre-flop (i.e. avoiding trying to steal the blinds from a complete calling station).
So, what colors are suggested? Well it's up to you and your preferences but here's what works well for me
Red - consistently profiting/leaderboard on Sharkscope grinder/pro/semi-pro. With this kind of player I'm assuming they have excellent shove/fold play and won't be playing bad hands early on, etc. Will nearly always be playing several tables.
Orange - reasonably profiting, perhaps recreational or part-time sit n go grinder. Probably playing a few tables at once.
Yellow - breakeven. Isn't a complete maniac but perhaps has leaks I can exploit (e.g. shove/fold)
Green - standard losing SNG player (even more important to take notes on these types of players so you can attack their particular tells/weaknesses).
Blue - complete lunatic calling station. Will rarely if ever fold, limps to call, won't fold any draw etc. Often middle game onwards I will only shove preflop to these players rather than risk raising pre flop and not flopping any connection.
I'd recommend taking an hour or so a week just to color-code players. What I mean by this is, don't actually play, but open up some active SNG tables and start color-coding people (e.g. by looking them up on Sharkscope etc). And always color-code SNG players during a game if you can (the less tables you're playing at once the easier it is)