Wall Street - what are they doing? No, seriously.

SJean · **Joined:** Mon May 14, 2007 7:20 pm **Posts:** 309

This might come off as somewhat of a ridiculous question.... but I did a cursory google search and came up with all of the wrong kinds of articles. And also, I wanted to get a feel for if I'm really the only one who doesn't get it. I asked my boyfriend, and he made some guesses, but admitted he didn't know any more than I do.

Ok, laugh at me if you must, but I'm curious. What really is going on Wall Street? I've seen movie/tv clips of stock brokers yelling out stocks and prices. Who are they yelling to? Each other? Where do these prices come from? Is someone in charge? Couldn't this all be done online? Is it like an auction?

Or say, if I have a brokerage account and am day trading (not that I advocate that), and I trade something.... what happens? Does some guy go down to the floor and sell it? (that seems silly)

Ok, I'm done with my questions. Enlighten me please! Maybe this is something I need to understand before I count as a real adult.

jdroth · **Posted:** Tue Sep 04, 2007 10:23 pm

You know what? I think I bought a book at Goodwill a few months ago that answers this question. It's probably in my purge pile, but I'll look for it. If I don't post anything more substantive in response, it's because I couldn't find it.

Bearcat fan · **Joined:** Fri Aug 10, 2007 1:32 pm **Posts:** 313

The market is going on line more and more

pf101 · **Posted:** Wed Sep 05, 2007 9:49 am

Bearcat fan wrote:

The market is going on line more and more

Yeah, I think the images you used to see in movies like trading places have, for the most part, gone the way of the DoDo. I don't think there are big pits of guys any more screaming bid/asks at each other and making paper trades. There are still floor traders but from what I understand they have more to do with futures and commodities than with standard stocks. When I was a kid I almost did an internship as a runner at the Chicago Board of Trade. I wish I'd done it, I'm sure it would have been a very interesting experience.

squished18 · **Joined:** Thu Apr 05, 2007 8:01 am **Posts:** 243

Hi SJean,

I think the movie/TV clips showing floor traders would be a lot less interesting if they showed a bunch of people sitting in a huge room with computer screens or a room full of computer servers, which I believe is a more typical picture of actual trading these days.

squished

SJean · **Joined:** Mon May 14, 2007 7:20 pm **Posts:** 309

squished18 wrote:

I think the movie/TV clips showing floor traders would be a lot less interesting if they showed a bunch of people sitting in a huge room with computer screens or a room full of computer servers, which I believe is a more typical picture of actual trading these days.

I concede that... I just wonder, that really did happen in the past, so what was going on?

Maybe i just don't need to know...

I remember in high school, I didn't even understand the concept of the stock market as an whole. I didn't grasp how you could put money in it, and why it would grow. So I suppose that shows my basic lack of financial education! But I'm much better these days.

marsman57 · **Joined:** Tue Sep 18, 2007 12:27 pm **Posts:** 354

Here is some information from http://www.investopedia.com/university/electronictrading/trading1.asp

Quote:

From a glance, the difference between the New York Stock Exchange (NYSE) and Nasdaq may not be marked. The NYSE lists household names like Coca-Cola, Wal-Mart, Citicorp, and General Electric, whereas the Nasdaq is home to many of the tech giants such as Microsoft, Cisco, Intel, Oracle and Sun Microsystems. Besides the heavy tech weighting, the fundamental difference between the two exchanges is in the way securities are traded.

NYSE
The NYSE is an auction market that uses floor traders to make most of its trades. Each stock on the NYSE has a specialist; this is a person who oversees and facilitates all of the trades for a particular stock. If you wish to buy a stock that trades on the NYSE, your broker will either call your order to a floor broker, or enter it into the DOT system (which we will discuss later on). (For more insight, see Markets Demystified and The Tale Of Two Exchanges: NYSE and Nasdaq.)

Nasdaq
The Nasdaq, on the other hand, is not a physical entity. The Nasdaq might be known for its fancy MarketSite Tower and broadcast studio in Times Square, but very little is done there. The Nasdaq is an over-the-counter (OTC) market and it relies on market makers rather than specialists to facilitate trading and liquidity in stocks. For each stock, there is at least one market maker, (large stocks such as Microsoft have several), whose duties we will discuss later on. (Want to learn more? Read What's the difference between a Nasdaq market maker and a NYSE specialist?)

Rather than being an auction market, the Nasdaq is a communications network between thousands of computers. Instead of brokers calling out orders, market makers place their names on a list of buyers and sellers, which is then distributed by the Nasdaq in a split second to thousands of other computers. If you wish to buy a stock that trades on the Nasdaq, your broker will either call up a market maker with the information of your trade or enter your order into a Nasdaq-sponsored online execution system.

plonkee · **Posted:** Thu Sep 20, 2007 9:45 am

Quote:

I concede that... I just wonder, that really did happen in the past, so what was going on?

I believe that they were bidding on stocks and shares, literally buying and selling like a market.

consultantjournal · **Posted:** Thu Sep 20, 2007 1:21 pm

Rent Rogue Trader, starring Ewan McGregor. Things are done by computer these days -- no screaming -- but it will give you a good overview of how the markets work.

SJean · **Joined:** Mon May 14, 2007 7:20 pm **Posts:** 309

Thanks for the good info! I'll look into it further

radioheadok311 · **Joined:** Mon Jul 09, 2007 1:14 pm **Posts:** 58

Love him or hate him but.... I think Jim Cramer writes accessible books to find out what investing is all about, including introductions to trading and researching stock picks. I really think the guy gets a pretty bad wrap in the press, I can explain further if anyone cares....

I work for a money-manager and I have to admit, the market still baffles me at times. It is really a matter of what each party is willing to pay for an individual stock and then matching up those people. The internet and increased liquidity have done wonders for how fast you can execute trades.

Given the recent troubles in the market, you have to really wonder what the people on Wall Street are doing. I have taken shelter by not focusing on the panic and headlines, but focusing on the fundamentals of a company we are invested in. I have become a big student of Warren Buffett and Peter Lynch (very successful mutual fund manager) and all I can say is that if you become familiar with them, investing and the market machinations become a lot less important.

Wall Street - what are they doing? No, seriously.

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