Insider Hint: Understanding the Exchange

Provided By www.stocktradingonline.org

Physically, the trading arena of the New York Stock Exchange (NYSE) is a huge, cavernous, high-ceilinged room, in which activity centers around 18 horseshoe-shaped trading posts. Twelve of these are regularly spaced about the main trading floor, and six are located in an annex. In actuality, each is a counter across which the traders on the outside pass notations of their completed transactions to the clerks stationed inside.

About 75 stocks are bought and sold around each post. International Business Machines, Firestone Tire and Rubber, and American Smelting are at Post 11, U. S. Steel, Detroit Edison and Libbey-Owens-Ford at Post 2, Standard Oil (N.J.) Kaiser Aluminum, and Dow Chemical at Post 9.

Around the perimeter of each post are stations at which six or eight of its 75 stocks are traded. Each of these stocks is listed on a panel above the counter, together with an indicator showing the last price of the stock, and a plus or minus sign to show whether it was higher or lower than the last different price.

Every stock listed on the Exchange is assigned a symbol of one, two, or three letters, often approximating its company initials, which are part of the shorthand of the ticker tape. AT is American Tobacco, OLM is Olin Mathieson Chemical, RCA, CBS, TWA, DOW are self-explanatory. J is Standard Oil (N.J.). X is the famous symbol of U. S. Steel.

All transactions are carried on the tape, and assumed to be 100-share trades unless otherwise noted. KN 94 means 100 shares of Kennecott Copper were sold at 94. EK 2S1071/2 means 200 shares of Eastman Kodak were sold at 1071/2. The "S" means shares and is inserted to keep price and amount separate. GM 54 ... 2S1/2means that 100 shares of General Motors were sold at 54, and immediately afterward 200 shares were sold at 541/2. JM 491/4.1/4 means two consecutive sales of 100 shares each of Johns Manville were concluded at 491/4. Should a large block of 1,000 shares or more be sold, the amount is printed in full JM 1000S491/4

When the sales volume is heavy and the ticker is racing to keep up with events, the first digit of the price may be dropped, unless the final digit is zero. KN 94 would then appear as KN 4, and brokers and others following the tape closely would be expected to know what the missing figure was.

At the edge of the floor are banks of telephones, private lines constantly attended by clerks representing the various brokerage firms. Buy and sell orders come in to the clerks for execution by the firm's member (or members) on the floor.

High above the floor in each corner of the room, the ticker tape is projected. Across two walls is a bond tape. On the two opposite walls are the annunciator boards, panels of numbers, one of which is assigned to each floor broker. When his number appears on the boards, the broker knows he is wanted at his firm's telephone.

Under the annunciator board on one wall projects a little balcony from which, by the ringing of a ship's bell, the start and finish of each day's trading is signaled, and from which announcements of grave importance, such as the suspension of trading or the suspension or expulsion of a member, are made.

Overlooking all, above one of the bond tapes, is a visitors' gallery from which one may freely observe the mesmerizing commotion on the trading floor below. This is a fascinating experience, and a must-see if ever in New York city. However amazing it might seem, the teeming chaos below is where the engine of our (and arguably the world's) economies churns.

This article is a small snippet from www.stocktradingonline.org

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