From the pit to the screen
Danny Riley learned the S&P on the floor of the Chicago Mercantile Exchange, where order flow was something you saw and heard. We read the same order flow on screens. Here is what carried over.
What carried over
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Who is buying and selling
The pit
On the floor you saw it. Brokers traded for their customers, and locals traded their own money.
The screen
The order book shows the size waiting at every price, and the tape shows who is in a hurry: buyers lifting the offer or sellers hitting the bid.
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Where value is
The pit
A market spends most of its time around a price both sides accept and only moments at the extremes. J. Peter Steidlmayer, a trader at the Chicago Board of Trade, turned that into the Market Profile in the 1980s.
The screen
We read it in the volume profile: the point of control, where the most volume traded, and the value area around it with about 70 percent of the volume. At the edges of value we ask one question: is price accepted there, or rejected?
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How a trade is called
The pit
Every bid and offer was called out loud and shown by hand: palm toward you to buy, palm away to sell, fingers for price and quantity. The signals differed from pit to pit.
The screen
In the room we call every trade live: where we get in, where we are wrong and where we take profit. Before the open we post the levels we trade around.
The pits closed.
- 2015CME Group closes most of its futures pits in Chicago and New York.
- March 2020The S&P 500 pit, where Danny started in 1985, closes and never reopens.
- 2021CME delists the floor S&P 500 futures and options after their September expiration.
Order flow and the auction stayed. Only the place where traders read them changed.
Sources: CME Group’s announcements of February 2015 and May 2021; J. Peter Steidlmayer’s Market Profile, Chicago Board of Trade; the Corporate Finance Institute on floor traders; StoneX’s guide to trading-floor hand signals. Danny’s background as published by MrTopStep: Danny Riley’s profile
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