traders still have the option of using e-commerce or trading pit in several commodity markets. eceThe ICE has increased its presence in recent years and is entirely electronic - no commercial pit. The old school thought is that trading pit is the most effective way of price formation, but it is difficult to deny the benefits of electronic commerce. So, what is better?E-commerce has much cheaper commissions to retailers and trade run much faster than a floor broker could do. Once trade electronic futures contract, it is difficult to imagine how it ever did in the old way.Trading PitThere was a time when I would have to call your broker to place an order.He then called down to the employee and the employee might transmit the order to the corridor floor. Once the order has been executed, the floor broker would retransmit it back to the seller and the employee might transmit back to your broker ... and then your agent will give confirmation. There are a lot of steps in the process, but it would take about a couple of minutes for the entire process is complete.For electronic markets, the whole process takes only a few seconds. The kicker here is brokerage commissions on trade is usually significantly lower for electronic commerce. It is not difficult to see why e-commerce is put floor trader on the verge of extinction.floor brokers can make a case to be able to get better performances - which means that you can get a better price on their orders.In theory this is true, but not in everyday life. It's nice to be able to descend to the ground and talk to a floor trader or someone who works on the desktop. Probably you will not have a better opinion about the situation of the market through this process. It might help you make a better business decision for talking to someone on the ground.
Now, the execution of operations, is another matter. Occasionally I was able to get a better execution of a floor broker. However, I can not remember how many times I thought the performances were very poor. floor brokers have to earn a living and sometimes it is at the expense of the retailer.Another thing to consider in this debate is whether electronic commerce can handle chaotic times. It's hard not to forget the flash crash that took the Dow down nearly 1,000 points in a couple of minutes. e-commerce was the cause of the flash crash. high frequency traders are responsible for an increasing amount of the volume of the stock exchanges. A good argument can be made that manipulate prices much more than floor traders could.
