Open Outcry

Author:

Moneyzine Editor

1 mins

November 6th, 2024

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Definition

The term open outcry refers to a communication method occurring between members of a stock or futures exchange. Open outcry uses a combination of shouting and hand signals to exchange buy and sell order information.

Explanation

Open outcry is a method of communication that occurs on a trading floor, or pit, where an exchange of buy and sell data facilitate the trading of securities, such as stocks, in addition to commodities. When a trader wants to sell a security, they would shout out the price. If another trader is willing to purchase the security at this price, they would shout back in response. Hand signals were used to communicate both sales volumes and timing in the case of futures.

Electronic trading systems are used by many exchanges today, thereby making open outcry an obsolete method of communication. Not only is the exchange of information electronically more efficient, it reduces cost as well as the time it takes to fill an order.

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