Commanders Post at The Warpath - View Single Post - Somebody please explain the chaos at the NYSE

12thMan · 04-25-2008, 01:49 PM

Actually it's far less chaotic than it really seems. If look you closely, you'll notice those guys (floor traders) all wear different color jackets and are handling specific securities/orders for specific firms. So what they can and cannot do is already defined. So that takes a lot of the confusion out of what they're roles actually are. Much of it has become more automated over the years.

The NASDAQ and the NYSE operate differently. The NYSE (which you probably saw on the commercial) is a physical location or exchange, while the NASDAQ is an automated/electronic exchange that trade stocks.

So stocks that trade on the NASDAQ (National Association Securities Dealer Automated Quotation) are completely automated and computer driven. You call your broker to sell 100 shares of Microsoft at the market (first available price), he/she punches that order into his computer and it's automatically excuted at whatever the market is asking/bidding at the moment. So it happens instantly.

NYSE, same scenerio, different company. These guys (floor traders, brokers, and Specialists) don't take the order for your 100 shares of company ABC. In this instance, they're handling bulk orders of that same stock. Say maybe 100,000 shares of ABC. It's then walked over to another post, and again, the bidding price and asking price is determined by another guy wearing a different color jacket. The orders are pretty much matched up right there (simplifying it some) and the price of the stock is set. So forth and so on throughout the day.

04-25-2008, 01:49 PM	#3
12thMan MVP Join Date: May 2005 Location: washington, D.C. Posts: 11,460	Re: Somebody please explain the chaos at the NYSE Actually it's far less chaotic than it really seems. If look you closely, you'll notice those guys (floor traders) all wear different color jackets and are handling specific securities/orders for specific firms. So what they can and cannot do is already defined. So that takes a lot of the confusion out of what they're roles actually are. Much of it has become more automated over the years. The NASDAQ and the NYSE operate differently. The NYSE (which you probably saw on the commercial) is a physical location or exchange, while the NASDAQ is an automated/electronic exchange that trade stocks. So stocks that trade on the NASDAQ (National Association Securities Dealer Automated Quotation) are completely automated and computer driven. You call your broker to sell 100 shares of Microsoft at the market (first available price), he/she punches that order into his computer and it's automatically excuted at whatever the market is asking/bidding at the moment. So it happens instantly. NYSE, same scenerio, different company. These guys (floor traders, brokers, and Specialists) don't take the order for your 100 shares of company ABC. In this instance, they're handling bulk orders of that same stock. Say maybe 100,000 shares of ABC. It's then walked over to another post, and again, the bidding price and asking price is determined by another guy wearing a different color jacket. The orders are pretty much matched up right there (simplifying it some) and the price of the stock is set. So forth and so on throughout the day.