Open outcry system
What is an open outcry system?
A traditional way of communicating information across the trading floor of a stock, commodity or futures contract exchange. Traders communicate verbally and use hand signals. For example, one trader might signal they're keen to sell at a particular price and another may respond that they're willing to do a deal.
Where have you heard about open outcry systems?
Although it may appear chaotic, open outcry is the original way of matching buyers and sellers. Because of its long history, you may have seen it in films which aim to capture the drama of financial markets.
What you need to know about open outcry systems.
Exchanges have gradually replaced open outcry systems with electronic trading, in order to improve efficiency and lower costs. But while they might appear to lack structure, there's method in the madness, since open outcry systems convey lots of important jargon and price information.
Open outcry has also been praised for the fact it gives traders the chance to see each other in person. This means they can take into account facial expressions and body language when making buying or selling decisions.