Methods of Trading
(i) Open-Outcry: It is a method of communication between professionals on a stock exchange which involves shouting and use of signals by hand to transfer information about buy and sell orders. It is a traditional method of trading commodities. Essential information are passed across among the professionals orally and with demonstration (hand signals). The trading floor where this takes place is called “a pit”, “trading room” or dealing room”.
(ii) Electronic Trading: It is otherwise known as e-trading or online trading. It is a method where securities such as stocks and bonds foreign exchange are traded electronically. It is cheaper, faster, and more efficient for users and less prone to manipulation by dealers, brokers, and market makers. Information Technology is used to bring sellers and buyers together.