Trading floors techniques

 

Trading is a lucrative business which takes place across the globe and the participants are countless. But where are all these activities happening physically. Stock exchange is a platform where trading activities take place and there are many assets and participants that are traded. Physically trading happens on a trading floor.

All about trading floor

By definition, trading floor is a physical area or space where trading activities are carried out using multiple kinds of financial instruments including the likes of futures, options, equities among others. Usually, the area is located inside every stock exchange, including NASDAQ and NYSE. In case of financial centres like investment bank, many times there exist a space where trading activities are carried out. Today most of the trading is carried out in online mode using electronic trading modes but times before these development, open outcry was the primary means of trading. Today the existence of trading floors is limited as they have been replaced by screens and algorithmic trading. Trading floor in Lucknow is made of pits inside a stock exchange and it is usually circular in shape with steps ascending to the floor. There may be different kinds of traders on the trading floor in Raipur including floor brokers who works on behalf of their clients. Traders in the line of hedgers, scalpers, spreaders, position traders are all part of this trading floor.

NYSE trading floor and trading method

Most of the functions in the trading are automated and executed within seconds. Before opening and closing of the trading each day, the trading floor rings a bell to indicate the same. When the trading floors are things of the past, NYSE allows trading on the floor as well. Before technical advancements, open outcry was the primary method for trading.

• The method makes use of verbal or hand signals for communication and conveying information
• To increase the bid, a broker uses hand raise signal
•  Those participating in trading floors must have an agreement with the investors or  clients they are representing
• There are several stock exchanges today that make use of both electronic and open outcry method for trading

Downfall of the trading floor

Trading floor in Kanpur is slowly losing its existence owing to sudden emergence of computer screen, electronic markets, algorithmic trading etc. As per the records, Instinet was first alternative for trading floor in 1967 but took time to get into the established world of trading. Today most of the trading volumes are handled via electronic medium rather than traditional trading floors. Although with trading floors, decisions and profits can be made on an instant basis and those involved in this trading make heavy profits. However, with advancements in technology, people were tend to move ahead and take advantage of electronic medium for trading in the market.

Trading floors have very low existence these days and more and more people make use of electronic medium to make profit in the business. It may not come as a surprise if the new gen involved in the business hardly knows about this traditional method.