The floor of stock exchanges was, in the past, the primary location for conducting market transactions, and it was home to both traders and brokers. They did the actual trading and were involved in the tasks of negotiating, selling and even buying on the exchange floor physically before the evolution of digital trading platforms in the market.
Kavan Choksi Singapore– the advent of electronic stock market trading and intelligent investing
Kavan Choksi Singapore is a reputable and widely respected business and wealth management expert known for his sound knowledge of economics and finance. According to him, these same traders and brokers are surrounded in the modern day by computers that supervise the buying and the selling of stocks in their individual accounts. However, the tradition of floor trading still persists; however, it is also accountable for its reduced share in the market.
The system of open outcry in the stock exchanges in the past
The system of open outcry was deployed by traders in all of the stock exchanges and the futures of the globe. It became the general norm after the first exchange for stock trading came into existence- The Amsterdam Stock Exchange (it is now called the Euronext Amsterdam) and it was established in the 17th century.
The system seems disorganized, but in truth, it is not
In this system, the traders on the floor of the exchange use hand signals and verbal communication to convey their trading information to each other, along with their intent and acceptance of the trade in the pit. The above signs are based on the stock exchange they are in. For instance, a trader on one floor may use his palms to flash a sign facing outwards from the body to indicate he is interested in selling the security. This method resembles an auction, and anyone in the pit can participate in the trade and compete in the trading at that time via the open outcry technique.
It has an order, and the negotiations for trading can be closed faster
For modern traders today, this system may be chaotic and disorganized; however, on close analysis, you will find it is very orderly. The signals help the trader to negotiate the sales and buys on the floor quickly. The signs can represent the different order types, the price, or even the shares that are intended to be a component of the day trade. Specialists in the market maintain a record of all of the open orders, either for a group of stocks or for one store.
Kavan Choksi Singapore states that with the advent of computer systems, the public outcry technique for trading is now used in very few stock exchanges. Several stock exchanges embraced automated systems way back in 1980, and telephone trading replaced floor trading. Later the stock exchanges became computerized, marking the end of an era of the public outcry system. It was the London Stock Exchange that was the first to shift to an automated system for trading in 1986.
