What People Do on the Floor of the New York Stock Exchange
I recently met up with veteran exchange trader Doreen Mogavero at the NYSE. In this video, I ask Mogavero to explain what exactly the people wearing blue jackets (you've probably seen them on TV) are doing on the floor of the exchange. Have a look (transcript follows):
Morgan Housel: So these people down here in the blue jackets, what exactly are they doing right now?
Doreen Mogavero: People traditionally called "specialists" are the DMMs, Designated Market Makers. Right now they are trading for the accounts of their firm, as well as helping to facilitate the order form that comes in from the public. So as they trade, there are two objectives. Obviously when you trade, you always want to make money, no matter who you are, right? So the obvious answer is to be on the right side of the trade, but they also mitigate volatility by definition. They buy in the absence of natural buyers and sellers and the public, and they sell in the absence of sellers, public sellers, natural sellers. So they try to make up the difference, and fill in the holes and the gaps that the public doesn't do.
The article What People Do on the Floor of the New York Stock Exchange originally appeared on Fool.com.Fool contributor Morgan Housel has no position in any stocks mentioned. The Motley Fool recommends NYSE Euronext. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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