why in videos of stock traders at the stock exchange on Wall Street (especially in the 90s and such) are all of the guys shouting and clamoring? Are they putting in trades that way?
In: 197
Once upon a time, yes. This was the stock exchange floor.
The yelling and waving traders were getting the attention of people whose job it was to watch the crowd and note the trades. The movies presented the most chaotic version of this for dramatic effect.
These days the floor generally exists just for show, tradition, and events. Many no longer have a floor at all. The actual trading is now done electronically.
Yup.
Orders would come in over the phones to the trading floor. Runners would then take those orders to traders in the pit, who would communicate with other pit traders by shouting or using hand signals (which would signify price, amount, and whether they were buying/selling). When both parties signaled to each other that they would trade, each would mark the trade down in their books.
When the days trading was done, the trades would be reconciled and the actual shares/cash transferred between the brokerages.
That is why the plan in Trading Places worked. They sold a bunch of shares they didn’t have at the start of trading (when prices were high), but since they don’t actually settle up until trading is over, they could buy back all of those shares later in the day (when prices were low). They netted out at zero shares owned (they gave the share they bought to the folks to whom they sold shares earlier) but made millions in the process.
Yes
At the center of that pile of humans was someone taking in the bids and marking them off at the lost at the time of verbally agreeing. This was the passed to another person who essentially made the trade official
Open pit trading is pretty much a thing of the past. The one exception I can think of is the London Metals Exchange.
Until NASDAQ the exchanges were largely ticker tape and paper orders. If people wanted to buy stock they had to call their broker on the phone.
Those guys shouting back and forth on the floor were placing buy and sell orders from brokers.
The NASDAQ exchange changed all of that. It was the first computerized exchange. Say ‘thank you Bernie Madoff’ 😋
Yes!
As weird as it sounds there was a specific set of signals and rules for brokers and sellers trying to get trades in. And trades were made quite efficiently.
You might be thinking – “How can this possibly be enforced. Whoever lost out by the end of the day would just renege and how the hell would anyone even know” , but think of a casino. There are cameras, and the risk of cheating far outweighs the benefit especially when it’s your company’s money not yours. Self interest, not honesty, kept the machine running.
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