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The open outcry system is a traditional method of trading used on stock and commodity exchanges where traders shout and use hand signals to convey buy and sell orders in a trading pit. This system was historically used in places like the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange (CME). Although many exchanges have moved to electronic trading platforms, some commodity and futures exchanges still use open outcry for certain products.
In a trading pit at the Chicago Mercantile Exchange, traders using the open outcry system shout orders and use hand signals to negotiate the price of oil futures contracts.
• A traditional method of trading where traders shout and use hand signals in a physical trading pit.
• Historically used in stock and commodity exchanges.
• Largely replaced by electronic trading platforms but still used for some commodities and futures trading.
Electronic trading offers greater efficiency, speed, and transparency compared to the manual nature of open outcry systems.
It is still used in certain futures and commodities exchanges where the face-to-face negotiation process is valued.
Traders use hand signals and shout bids and offers, negotiating directly with each other to execute trades.
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