rosen@gypsy.UUCP (02/20/86)
I've always wondered about this and I was wondering if someone could explain this in more detail. I was wondering if someone could provided a fairly detailed explaination of what is going on in a commodity pit such as you often see on television. Of course I know that these people are buying and selling commodity futures, but I was never quite sure of exactly why they were so physical. For instance, why are they so aggressive and always yelling and pushing and waving their hands frantically? They always have a pencil and paper in their a hands, what is it that they are writing down? Who are they yelling at (you never see that person) ? I saw a TV show once that interviewed a female commodity trader and she was saying that in the past 15 years she had two broken toes and a broken elbow and bunch of bruises to show for her work. Are these people playing football or are they making financial transactions :-) ? What I am actually after is learning about the actual mechanics of the pits. Could someone shead some light on this? ---------------- | Steve Rosen | Siemens Research and Technology Laboratories | Princeton, NJ USENET: adrvax\ ihnp4 | princeton |-->!siemens!gypsy!rosen topaz | vrdxhq/ ARPA: siemens!gypsy!rosen@TOPAZ
steve@bambi.UUCP (Steve Miller) (02/21/86)
> I was wondering if someone could provided a fairly detailed explaination of > what is going on in a commodity pit such as you often see on television. Commodities futures are traded in several places. What you usually see on TV is the floor of the Chicago Board of Trade; the largest futures exchange. When you call your broker to place an order, he/she in turn calls a number on the floor of the exchange. A phone clerk (standing in a line of booths, each about 2 feet wide) writes the order on a card. A runner takes the card to the trader, standing in the pit. Pits are grouped by commodity. The card becomes part of the trader's "deck." Anyone may offer to buy or sell anything at any time. The provision exists that all offers to buy or sell must be made via "open outcry." That's why they're all screaming. If a trader hears an offer that matches an order in his/her deck, he/she will try to shout back that the trade has been made. Both traders will make a notation on the appropriate card in their decks, and runners will take these cards back to their phone clerks, who will call the ordering brokers, who in turn confirm the trade for their clients. While it may seem that no two people can be communicating in there, the traders I know assure me that very few trades get lost in the noise. A set of hand signals is usually used to specify prices/quantities. The same hand signals are used to report trades to the exchange employees standing at the edge of each pit (these people are called "the radio"), who enter the transactions into on-line reporting systems. Trading in commodities futures is often referred to as "buying something you don't want, and selling something you don't have." -Steve Miller ihnp4!bambi!steve