If there ever was a truly surreal experience in the finance industry, it’s being in the heat of a trading floor.
The heart of our financial system lies in the trading floor. Individual traders and brokers vie for the best prices on stocks and futures to create wealth for themselves and their clients, and it’s all done in real time. At the turn of a second, fortunes can be made and lost. It’s an important indicator of the health of our economy, and a signal for when trouble’s ahead.
So what is a trading floor? Why do traders take on the pressure to trade in real time, sometimes in competition with one another? What’s all the hubbub about? We’re going to take a dive into the history, experience, and importance of trading floors, and how they serve as the beating heart of the American financial system.
What is a Trading Floor?
Trading Floor Definition – A trading floor is a designated area in a stock exchange building where traders can access real-time stock prices to buy and sell at a profit. It is a large room with giant monitors broadcasting the latest financial information and analysis.
Often they are noisy and full of aggressive financial professionals keeping their focus on the markets for their next great trade. With billions of dollars being exchanged at any time, traders at the trading floor wield enough capital to drastically change the valuation of companies based on the scarcity or abundance of their stocks. Learn more about what a trading desk is here.
There is also often a speculator’s area where non-traders can witness the action live. Many cite the experience of witnessing the markets opening up in the morning – like the ringing of the bell at the New York Stock Exchange (NYSE) – as an awe-inspiring experience.
The History of Trading Floors
The first true stock exchange with a trading area was the Amsterdam Stock Exchange. Opened in 1602 by the Dutch East India Company, the facility allowed traders several hundred years ago to trade in paper notes of government and business debt.
Through the 19th and 20th centuries, stock exchanges began to transform into the trading floors we know today. Traders went from reading printed ticker tapes and shouting their trades to working alongside financial algorithms facilitating thousands of trades every second. The one thing that hasn’t changed over the years is the often frantic nature of trading floors.
Today, stocks are traded from our own smartphones in real time. In a way, the world has turned into a stock trading floor, and the sophisticated computational and information systems that deliver the latest prices and speculations continue to improve.
Artificial intelligence now manages the bulk of transactions. And with interest in becoming a day trader increasing over time, the arena for stock traders to face off is still drawing in some of the best minds in the finance industry.
Are You Building a Trading Floor?
You may be starting your own hedge fund, or building a place where you and your colleagues can work in real time. At Saraval Industries, we offer the highest-quality refurbished and new trading desks and other fixtures to create the optimal environment for creating fortunes with stock trading.