What do the people who go in person to the New York stock exchange actually do? Especially with online trading and information everywhere?
In: Economics
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)
Latest Answers