DEFINITION of 'Trading Floor'

The floor where trading activities are conducted. Trading floors are found in the buildings of various exchanges, such as the New York Stock Exchange and the Chicago Board of Trade. These floors represent the area where traders complete the buying or selling of an asset.

BREAKING DOWN 'Trading Floor'

The trading floor is also referred to as "the pit" of an exchange, due to the hectic nature of the area. However, with the advent of electronic trading platforms, many of the trading floors that once dominated market exchanges have started to disappear as trading has become more electronically based.

Trading floors can also be found in brokerages, investment banks and other companies involved in trading activities. In this case, it refers to the physical office location that houses the trading division, which can complete transactions over the internet or telephone.

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RELATED FAQS
  1. Why are traders on the floor of the exchange?

    Before the advent of electronic trading platforms, the floor of the stock exchange was the location for market transactions ... Read Answer >>
  2. What does membership in the New York Stock Exchange entail, and why is it known as ...

    Owning a seat on the New York Stock Exchange (NYSE) enables a person to trade on the floor of the exchange, either as an ... Read Answer >>
  3. What exactly is being done when shares are bought and sold?

    Most stocks are traded on physical or virtual exchanges. The New York Stock Exchange (NYSE), for example, is a physical exchange ... Read Answer >>
  4. What do traders' hand signals mean on the trading floor?

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