Stock market technology has evolved past the pen and paper stage.
Stock market trading is, at heart, a very simple and personal form of business: Traders offer to sell or buy stocks and negotiate prices with other traders. Over time, though, technology has become more prevalent. In some cases this simply reduces administrative costs and limits the effects of human error. In other cases it can make the trading system itself more effective by increasing the availability of the information that influences trader decisions.
Electronic Trading
For most of the 20th century and before, stock markets operated a system known as open outcry. This meant that traders made deals to buy and sell stocks and other securities through face-to-face negotiation using both spoken (or in most cases shouted) instructions and hand gestures. Today, many stock exchanges instead use electronic trading by which traders use a linked computer network to communicate the prices they are willing to accept and to confirm the deal.
The main benefit of electronic trading is that traders can more easily get a picture of all the deals on offer, meaning they can select the best price for their needs. In turn, this should mean that the entire market operates more efficiently and prices will better reflect overall demand and supply. One drawback is that traders cannot always see the body language and facial expressions of the person they negotiate with, which can make it harder to gauge how strong or weak their bargaining position might be.
Wireless Data
Several stock markets, including the New York Stock Exchange, now operate wireless communications systems. This means that traders can make deals from anywhere in the stock exchange rather than being tied down to a particular desk. This system allows traders to harness the benefits of electronic trading and the benefits of personal communication with traders, including the ability to have private conversations.
Stock Market Ticker
A stock market ticker is a continuously updated list of stock prices. Originally, the list was printed on ticker-tape, but today the details are carried electronically. For much of the 20th century, the only "live" tickers were those available to traders in stock exchanges as a commercial service. Free tickers, such as those operated by television channels that displayed the information scrolling along the bottom of the screen, were only allowed to show the prices on a 15- or 20-minute delay. These restrictions have fallen out of use in most markets, mainly because of the effects the Internet has had on people's expectations of instant information.
