WHY DO TRADERS YELL AND WAVE THEIR ARMS?
Futures trading appears manic. Yet traders are communicating with a special language as they yell and wave their arms. Traders use a series of hand signals and a type of verbal short-hand to indicate whether they’re buying or selling and at what price. They yell because they need to be heard in the loud, competitive environment of the trading pit. The yelling and arm-waving that occurs in the pit represents the purest example that exists of a competitive free market – buyers and sellers meeting face to face, negotiating price. This method of trading is called “open outcry” and distinguishes commodities trading from stock trading. Contrary to some opinion, prices are not “set” at a futures market; the price is simply what a buyer is willing to pay and what a seller is willing to accept. The “open outcry” system enables buyers and sellers to hear all available bids and offers; similar to an auction but in this case every trader is also his own auctioneer. All trades occur on the KCBT tra
Futures trading appears manic. Yet traders are communicating with a special language as they yell and wave their arms. Traders use a series of hand signals and a type of verbal short-hand to indicate whether they’re buying or selling and at what price. They yell because they need to be heard in the loud, competitive environment of the trading pit. The yelling and arm-waving that occurs in the pit represents the purest example that exists of a competitive free market – buyers and sellers meeting face to face, negotiating price. This method of trading is called “open outcry” and distinguishes commodities trading from stock trading. Contrary to some opinion, prices are not “set” at a futures market; the price is simply what a buyer is willing to pay and what a seller is willing to accept. The “open outcry” system enables buyers and sellers to hear all available bids and offers; similar to an auction but in this case every trader is also his own auctioneer.
