The floor of the stock exchange was once the main location for market transactions in stock exchanges before the evolution of electronic trading platforms. It was home to the traders and brokers who did the actual buying, selling and negotiating on the exchange floor.
Those same brokers and traders are now surrounded by computers that manage the majority of buying and selling of stocks for their various accounts. Floor trading still remains, but it is responsible for a rapidly diminishing share of market activity.
Will Floor Traders Become Completely Obsolete?
The open-outcry system of trading can appear to be chaotic and disorganized. However, it is actually quite orderly. Traders on the floor use signals to quickly negotiate buys and sells. These signals may represent different types of orders, a price or the number of shares intended to be part of the trade. Specialists maintain a book of all open orders for a stock (or group of stocks).
While trading on the floor of the exchange is being quickly eroded by electronic trading platforms, this method of trading doesn't appear to be completely going away any time soon, at least for traders at the New York Stock Exchange. So, traders are not trading on the floor of exchange because they don't have desks, they are there because standing on the trading floor is still a way of trading on the stock exchange.
(To learn more, see The Tale of Two Exchanges: NYSE and Nasdaq.)