What is the Structure of a Trading Floor & How it Works?

Want to learn about the structure and working of a trading floor? So, for a better understanding of the working of the trading floor, we need to first understand the structure of a trading room. As the whole structure is dependent on the good foundation only.

So, let’s begin with understanding the structure of a trading floor, then comes the method that takes place on the trading floor (Open Outcry Method).

The trading floor is a large area consisting of several circular arenas also known as pits. All financial instrument trading activities such as equities, futures, etc used to happen before 2010 in pits only.

What is the Structure of a Trading Floor?

The trading floor is a very large area with several circular arenas also known as pits as mentioned above. For a better understanding of the structure of a trading floor, let’s focus on only one pit which would help us in getting a better picture of the working of the other pit.

What are the Components of a Trading Floor?

There are two components that are involved in the trading floor concept. These are :

➤ Pits and

➤ Booths

So let’s understand these parts of the trading floor each by each.

The pit consists of a flat center area and broads step increasing concentrically ( i.e., circumference) to the border/edge. These steps make sure that traders can see each other perfectly. All trading conducted in the pits only. Traders stand either in the pit facing outwards to the edge or stand on the steps – facing inwards.

Booths ( basically electronic equipment i.e., Telephones) are installed very close to the pits which are assigned to the brokerage firms. These booths then get the orders from firms or from clients and these orders are conveyed via messenger to the broker in the appropriate pit.

There are no. of devices available which display information related to trading on the trading floor.

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