Trading Pit Questions/experiences

[:::grimReaper::: 10]

Very interested in it.

 

1) How does it work? Do traders yell and signal and update a central desk with their bids and offers? Or is it more decentralized, i.e buyers try to find sellers among themselves?

 

2) What are the spreads and volume like? What were they like 5-10 years ago?

 

3) What tools do they use? How are prices coordinated with globex to prevent arbitrage?

 

4) If you worked or traded there, I'm interested in any stories or experiences you have to share.

 

Thanks

[TheDude 10]

Very interested in it.

 

1) How does it work? Do traders yell and signal and update a central desk with their bids and offers? Or is it more decentralized, i.e buyers try to find sellers among themselves?

 

2) What are the spreads and volume like? What were they like 5-10 years ago?

 

3) What tools do they use? How are prices coordinated with globex to prevent arbitrage?

 

4) If you worked or traded there, I'm interested in any stories or experiences you have to share.

 

Thanks

 

1. Brokers come with customers orders. locals who trade their own/firm account or other brokers trade against those orders. or a local if he needs to trade will request a market from the others. orders are requested in this oder - month, price at qty (if selling) qty for price (if buying)

 

2. depends on product. most trades now are block trades, where the local will typically trade out of the position on a terminal as and when he can.

 

3. in my day the tools were a wad of trade slips, a pen, a few spare pens, and a sharp pencil (to jab people with). pricing sheets when i traded options, a clerk, and a bad attitude, and a caffeine overdose in the morning, and a jacket with various badges/labels to show your clearing firm, trading privileges/rights, photo with mnemonic (unique trader id). now days i believe they use the above and a tablet pc's to arb the pit v screen where they can.

 

4. too many to go in to.

 

dont bother trying to pursue it as a career. its a dead end now. fun while it lasted. move on.

Edited January 5, 2012 by TheDude

[:::grimReaper::: 10]

1. Brokers come with customers orders. locals who trade their own/firm account or other brokers trade against those orders. or a local if he needs to trade will request a market from the others. orders are requested in this oder - month, price at qty (if selling) qty for price (if buying)

 

But how exactly does it work? A broker who wants to go long joins the sweaty pit trying to find enough locals who are selling? If so, then how does the exchange know the best bid/offer?

 

2. depends on product.

 

Oops, I meant the big S&P.

 

 

dont bother trying to pursue it as a career. its a dead end now. fun while it lasted. move on.

 

Of course, just interested in how things were/worked.

[TheDude 10]

broker has an order to pay 6 for 20 lots. local is offered at 6. broker gets his attention and shouts filled at him (or local to broker). both scribble trade details on a card with the others mnemonic and/or clearing firm, each slip gets passed to their clerk who scurries off and enters it in a trs system (exchange software). meanwhile pit official reports the trade upstairs.

 

(note - if it was a big busy pit, there may even be 2 markets/quotes at different ends and some folk would arb the difference in the same pit. )

 

clerk scuttles back to the pit to collect more trade slips.

 

the clerks of respective firms reconcile trades with the other firms they've traded with every hour or so

 

no idea about the s&p sorry. wasnt there. i know that there were only ever 9-11 traders in the nasdaq pit which kinda spooks some people - closed market and a license to print money.

[eduncan 10]

Get the movie "Floored" on Netflix. Great documentary about floor trading.