Floor Trader Hand Signals

The signals let traders and other floor employees know how much is being bid and asked how many contracts are at stake what the expiration months are the types of orders and the status of the orders.

Floor trader hand signals. Explore the open outcry hand signals below. As you can imagine a trading floor is a place where you would see traders screaming waving their arms using their bodies like crazy etc. Cme hand signals are the default example with any variations listed in each exchange category.

Hand signaling also known as arb or arbing short for arbitrage is a system of hand signals used on financial trading floors to communicate buy and sell information in an open outcry trading environment. A formerly popular method of trading at stock or futures exchanges involving hand signals and verbal bids. And if you miss one bit you will lose.

A floor trader is required to pass a screening process before trading on an exchange. Hand signals are first adopted by chicago mercantile exchange in the early 1970 s. The last type of demeanor is using hand signals.

The ability to recognize all market participants was what made open outcry trading transparent and from this signals were developed for the larger brokerages and for some large local traders. It s a place where everything happens pretty fast. The system is used at financial exchanges such as the chicago mercantile exchange cme and the american stock exchange amex.

It also provides anonymity to big traders and also traders believed that this methodology is less prone to manipulation. Hand signals are better and faster than a verbal communication in a noisy trading floor environment. The history of hand signals on the trading floor begins around the middle of the 19th century.

In cases where a more universal signal was never developed their hand signal in the pit would simply be their three digit firm number.