What is floor trading?

Floor trading refers to the physical location where traders gather to buy and sell securities. Traditionally, this occurs on the trading floors of stock exchanges, such as the New York Stock Exchange, where traders engage in face-to-face transactions. In a floor trading environment, brokers and traders can interact directly, which allows for immediate communication and a dynamic trading atmosphere. The presence of a physical space designed for trading facilitates the fast-paced nature of financial transactions and can lead to more transparent price discovery compared to electronic or remote trading.

While other options may involve trading mechanisms or platforms, they do not capture the essence of what floor trading specifically entails. Automated trading systems refer to computer-based platforms that execute trades, and online trading involves transactions conducted via the internet, both of which differ fundamentally from the traditional physical trading environment. Remote trading via satellite also does not align with the concept of floor trading, as it suggests distance and elimination of physical interaction, contrary to the direct engagement characteristic of floor trading.