Trading Pit Hand Signals Pdf
Price is indicated at arms length away from the body and quantity is displayed close to the face.
Trading pit hand signals pdf. The part of the trading floor where this takes place is called a pit. New bids or offe. Each pit is divided into segments designated for different contract delivery months. The signals let traders and other floor employees know how much is being bid and asked how many contracts are at stake.
The lead month the month closest to expiration and usually the most actively traded requires the most space. Futures and options contracts are standardized for monthly expiration cycles and different hand signals evolved to signify each month. Cme hand signals are the default example with any variations listed in each exchange category. In the cme s p 500 futures pit for example the lead month takes up about 90 of the pit.
Numerical quantities of 1 5 are displayed with vertical fingers and 6 9 are displayed with horizontal fingers. Like most signals the monthly signals were developed based upon simplicity and sometimes based upon the letter of the alphabet which serves as an industry code for each month. The basic factors to understand are palms in towards the body indicate the action of buying and palms out indicate selling. Hand signaling open outcry 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.
It involves shouting and the use of hand signals to transfer information primarily about buy and sell orders. Most traders in the pit are locals. Hand signals the sign language of futures trading represent a unique system of communication that effectively conveys the basic information needed to conduct business on the trading floor. One hand is held at 45 degree angle with fingers extended.
As chicago closes many open outcry trading pits this oral history preserves the unofficial sign language traders developed to communicate their orders in the noisy chaos of the merc. In an open outcry auction bids and offers must be made out in the open market giving all participants a chance to compete for the order with the best price. Hands are held with fingers extended and brought together at 45 degree angle. Hand is held above head with index finger extended downward then rotated in circles.
Roof of house shorthand version. To preserve for historical record the hand signals of open outcry pit trading.
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