DEFINITION of a trading floor
The trading floor is the area of a business or an exchange where assets are bought and sold. Most commonly associated with stock exchanges and futures exchanges.
WHAT IT IS IN ESSENCE
It also often refers to a trading pit.
Traditionally, it is a frenetic, open space where traders communicate via ‘open outcry’: mostly shouting and hand signals.
The trading floor is dynamic, fun, fast-paced, focused, and loud.
As the name suggests, a trading floor is a place where traders buy and sell securities, shares, commodities, foreign exchange, options, etc.
The trading floor at any big bank is basically just desks, phones, monitors, and people squished together. With a ton of cables and wiring under the floor.
Some people love the trading floor layout.
It enhances communication, transparency, collaboration, and focus. It is so much more efficient than a cubicle or desk layout.
Its officers often have standing impromptu meetings for a few minutes.
But the escalation of electronic trading has made this kind of communication rare and made quiet down many trading floors.
As you can imagine, it is a place where you would see traders screaming, waving their arms, using their bodies like crazy, etc. It’s a place where everything happens very fast. And if you miss one bit, you will lose.
The trading activity reaches its peak at the time of starting and at the time of the ending. In between the trading activity is a combination of high and low energy.
HOW TO USE
On this very placer, traders buy or sell securities on behalf of their clients or the organization that they work for.
A trading floor looks like a circular area. It’s often called “a pit”. Yes, because when the traders trade they step down onto a certain area and buy/sell securities.
The trading floors can be found in places where trading activities occurred.
You can also find them in investment banks, brokerage houses, in firms that are in the trading business.
The traders buy/sell securities on the trading floors via telephone, internet, etc.