I went there and I got a tour by one of the guys who used to give tours back when there were traders there.
There are no traders there. No one shouting and jostling. No floor cluttered with trading slips. It’s not loud.
The majority of the people there are news anchors, for some reason still covering the market because people like to see it on TV I guess even though there’s no traders there, and the cameraman and support crew for those news anchors.
When you see in the media from time to time some newly listed CEO pounding the gavel to start the days trading, there’s no traders listening and chomping at the bit on the floor below them.
https://www.investopedia.com/financial-edge/0511/the-death-of-the-trading-floor.aspx
Which Is Better? It may seem intuitive or obvious that electronic trading is superior to open outcry. Certainly computers are faster, cheaper, more efficient and less error-prone with routine trades – though the error rate in open outcry trading is surprisingly low. What’s more, computers are at least theoretically better for regulators in creating data trails that can be followed when there are suspicions of illegal activity.
That said, electronic trading is not perfect and open outcry has some unique features. Because of the human element, traders who can “read” people may be at an advantage when it comes to picking up non-verbal cues on the motives and intentions of counter-parties. Perhaps analogous to the world of poker, there are some players who thrive as much on reading the players as playing the odds – and electronic trading removes those signals from the equation.
Oddly enough, human interaction is also often better for complex trades. Many of the trades that are sent to the floor at the CBOE and other open outcry exchanges are complex or unusually large. Skilled floor brokers can often get better execution (better pricing) by “working the order” with other traders – something that electronic systems generally cannot do so well. (Find out some of the lower-risk ways to invest in foreign markets. For more, see Playing It Safe In Foreign Stock Markets)
I think fundamentally the floors of stock exchanges exist for social reasons. Some have started to close but others like NYSE remain quite active. It is a status symbol to have a seat on the floor of the NYSE even if it’s of limited use
It basically comes down to:
Why do people still go to the casino if they can play poker on line?
It’s more fun to gamble in person.
There is nothing that happens on the floor these days that doesn’t happen a thousand times a day electronically but you can still go make trades with a human being if you want. These trades may involve more elaborate financial instruments than shares of single stock (but you can do that electronically too). Also one actual reason to be on the floor is that it is a forum for discussing investments. Although you get a much larger forum on a Bloomberg Terminal. Still talking to a person face to face is way more efficient than messaging.
Edit: typis
Edit 2:
A Bloomberg Terminal is a program that ever trader uses. It’s a news feed, stock ticker, spreadsheet, messaging app, and trading platform all in one program. It was designed in the 1980s by Mike Bloomberg and it’s UI has never been updated, and looks as terrible as it’s designer (although there are new front ends you can plug it into). It costs $20,000+ a year and is the reason Bloomberg is a billionaire.
Imagine you are at an auction. This auction is being televised and people are able to bid on these things at home. Well being there in person allows you to buy items faster instead of calling over a phone and putting your bid in with a debit card. The people in the “pit” are there to buy large amounts of stocks for a price at a fast rate. Let’s say a stock was worth 500 dollars and all of a sudden dropped to 350 well some people who have that stock might want to sell very fast while others who believe the stock would go back up might want to purchase it. That information doesn’t get to the viewers online for a significantly longer period of time. “we are talking 5 seconds to maybe a minute” but by then the stock has already been rebought by someone in the pit. Seeing it first hand and getting dibs on it faster. Think of it as a lag component when gaming. Everyone wants the best set up and the least amount of lag. Only the people that are with the big companies that are trading millions get the best setup (get to send someone to the NYSE pit).
I hope this answers your question.
It’s like if the stock exchange was a restaurant, online day trading would be people coming in booking a table for two for a quick lunch. No special concessions required, no additional help.
Now say you want to host a party in that restaurant with potentially hundreds of guests. Well that takes time and active effort. You need everyone involved to agree on when to meet, the details of the party, how it’s going to be funded etc.
It will also have an impact on the restaurant. That many people showing up for a big event will affect the layout of the restaurant, which seats are more desirable, the party may reserve items on the menu so there won’t be any left for other people, which will also affect the desirability of other items on the menu.
For a task this large it very much helps to get an event planner to organise the party and help the restaurant get set up, make sure they get their money and the guests are all happy, and to maybe research any issues this disruption may cause to other customers.
The stockbroker is basically the event planner. Organising and processing huge trades and calculating the effect this amount of money changing hands will have on other stocks in the space.
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