I’m not a complete git… I know how the stock market works, but when you see footage of the stock exchange you see heaps of people jumping and yelling at the boards.
What are they yelling?
Who are they yelling at/to?
Surely they can’t be heard anyway with all the noise?
Thankyou to whoever answers this.
I believe those chaotic scenes are becoming a thing from the past. Most stock trading is automated and occurs via computer networks and the internet.
Those scenes from the floor of the NYSE are still pretty noisy. I’d like to know the answer myself.
Well, I’m in back-office operations myself (not the floor), so someone with more expertise might come along and correct me, but . . .
Price quotes and lots they’re trying to buy or sell, e.g. “Buying 100 AGE @ 50,” or “Selling 100 AGE @ 52”
Other traders looking to buy / sell.
Sometimes yes, sometimes no. That’s what the hand signals are used for.
Oh, and I wouldn’t say “most” stock trading is done electronically. The floor still thrives, and on-line brokerage trades are still not fully automated to the point where no floor trades are made.
But how can some stranger just stand on a floor and yell out “Buy me some xyz’s at 12c”.
Do they wear some sort of ID tag? And what if they are misheard?
…and why do they have to yell it at the boards? Why don’t they just buy the stocks themselves?
You can’t get on the floor of the NYSE without credentials – a “seat” on the exchange means you have the right to be there and make trades. You also wear a badge to identify yourself.
The people who actually make the trades are called “specialists.” They buy and sell shares for a particular group of stocks (each stock is usually handled by a single trader), either from their own account or by matching buyer and seller. They may have an offer to buy, say, GE at 85, and they’ll call out to see if anyone wants to sell it (a very simplified explanation, of course).
The actual trades are written down on slips of paper to prevent mixups. Hand signals are also used, though more often on commodity exchanges. Trades can be offered on paper alone – “runners” bring the order to the specialist, who act on it.
Looks to me like they are signing. They have a special sign language.
Why do they throw the tickets in the air & litter?
ID tags and color-coded jackets identify each trader and the firm for whom he’s trading. Each trade is identified by the badge number of the trader who made the trade (from the ID tag). Each trade is then “compared” through both the buying and selling firm to ensure both parties know the same stock / lot / price. Discrepancies are listed as “uncompared” and sorted out by back-office personnel in the Purhase & Sales Department.
They’re not yelling at the board, they’re yelling at each other. And they are buying the stock. This is how trades are made.
IIRC, they’re required to yell out by law in order to prevent such things as insider trading or any “secret” deals.
Quixotic has it right. Try here:
http://www.nyse.com/floor/floor.html
If it were required by law, “floorless” exchanges like the NASDAQ would be illegal.