What is Open Outcry?

John Lister

Open outcry is a system by which financial traders make deals through face-to-face contact. This is in contrast to electronic trading systems carried out via computer links, which are more common in major financial exchanges. Open outcry consists of both vocal communication and hand gestures. It is somewhat reminiscent of communication used in some countries by bookmakers who work at a racetrack.

A person showing his hands with the palms facing toward himself is displaying an offer to buy.
A person showing his hands with the palms facing toward himself is displaying an offer to buy.

The main hand gestures used as part of open outcry relate to numbers. The numbers one through five are conveyed by pointing the hand upwards and raising the relevant number of fingers. The numbers six through 10 are done by pointing the hand sideways, with one extended finger corresponding to the number six, two fingers corresponding to the number seven through to all five corresponding to 10.

The extended fingers will then be positioned to show the units in question. A finger or fingers touching the chin shows the number is in units, so one finger means simply one. The fingers touching the head means the numbers are 10s, so three fingers means 30. Numbers in hundreds are conveyed by first touching the forehead with a closed fist.

There are several other commands that can be conveyed. A person showing his hands with the palms facing toward himself is displaying an offer to buy, while someone with the palms facing away displays an offer to sell. These correspond to the position of the hands if somebody was physically pulling something towards themselves or pushing them away. There are also individual gestures corresponding to each month of the year for making deals that have expiration dates, such as futures contracts.

The main advantage of open outcry is that traders can read the body language and facial expressions of other traders. This can help them negotiate from a stronger position. The main disadvantages are that traders are more susceptible to influence from individual traders, and that they will have less information available compared with traders working from a computer system.

The hand gestures used in open outcry are somewhat similar to those used by bookmakers at racetracks. This communication is known as tic-tac. The big difference is that bookmakers use tic-tac to obscure the information so that they can communicate details about which horses are receiving a lot of bets without sharing this information with rivals. Unlike the financial traders, bookmakers tend to develop their own gestures and may even deliberately design them to be misleading to anyone who sees them.

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