What is it those guys on the stockmarket floor are doing when they start shouting and pointing? Who can hear or see what they’re shouting or looking at. I thought all the buying and selling was done by some guy behind a computer screen with a phone and a pair of red braces (probably.)
They are yelling and pointing at each other, trying to make trades. When the floor broker receives an order for a security, he or she heads over to a trading area where that particular security is designated to be sold. There, the broker, along with any other potential buyers, meet up with the seller(s). An auction ensues. When a buyer and seller agree on a price, the trade is recorded on the applicable computer system.
At least, that’s the oversimplified version. What actually takes place is far more involved and complex. For a more detailed description of the trading process, see:
http://www.nyse.com/floor/floor.html (click on the “Anatomy of a trade” link on the left navigation bar).
The above only applies to stock exchanges that have trading floors. NASDAQ, for instance, is a floorless exchange, and all trading is handled electronically.