Posts Tagged ‘trading floors’

What’s with all the yelling and hand signals?

Monday, October 5th, 2009

You’ve seen it in movies: the guys in suits yelling and screaming, making hand signals reminiscent of those on a baseball field. So what’s all the yelling about? It’s called “open outcry” and it’s a method brokers use on trading floors to verbally make bids and offers. Palms up and out means sell. Palms in and up means buy. One set of fingers is used for numbers 1-5. Turn the other hand on its side and those fingers become 6-10. For 1-9, touch your chin. For blocks of 10, touch your forehead. For blocks of 100, make a fist and touch your forehead. And so on, whew!

As trading moves from physical floors to the electronic exchanges, open outcry is becoming obsolete. Many support this shift, citing electronic trading as faster, cheaper, and more efficient. On the other hand, many brokers insist face-to-face trades allow them to be more strategic in their executions, especially due to the cues they take from open outcries, whatever they are – hands up, palms out, high five! Fist to the sky!