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Futures Technology 1630A 30th St # 365 Boulder, Colorado 80301 1-800-878-6070 303-442-6543 |
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An Introduction to Hand Signals
Hand signals are used extensively at the Chicago Mercantile Exchange for many purposes. They were developed over the last 20 years as a tool for those trading futures to rapidly communicate orders and fills back and forth between the pit and the order desk. Also, they are used within the pits to convey and confirm specifics of a trade such as quantity, month, etc. Hand Signal Development The use of hand signals emerged from the act of arbitrage of the financial futures contracts. Arbitrage is defined as the simultaneous purchase and sale of the same or an equivalent commodity or security in order to profit from price discrepancies. When the various instruments are mispriced in the marketplace, the arbitrageur buys/sells until it is no longer profitable, or until prices are back in equilibrium. In the early 1970s, traders began to notice that they could take advantage of these small price discrepancies if they could trade quickly enough. Consequently, hand signals were developed to help speed up communication. Another important reason for-the use of hand signals is because telecommunications equipment within the pit is currently not permitted because it would create an unfair advantage for some individuals or firms.
Hand signals are the favored form of communication for financial futures for the following reasons:
MARKET PRICE QUOTES:The PRICE is quoted by extending the hand
in front of and away from the body. When signaling a bid, the palm of the
hand always faces toward yourself. When offering, the palm always
faces away from you.
The rationale used in the placement of
the hand is that when the palm is facing you, you are bringing
something in toward yourself--BUYING.
When the palm is facing away from yourself--SELLING. Keep in mind that every pit has some
signals that are unique to it. A similar signal may have an
entirely different meaning in one pit than in another.
Quantity Quantity is indicated by touching the face. Quantities one through nine are indicated by touching the chin. Quantities in increments of 10 are signaled by touching the forehead. Quantities in increments of 100 are indicated by making a fist touching the forehead.
When you are using any hand signals your palms face you when you are signaling a "Buy", and your palms face away from you when you are signaling a "Sell".
The Rules and Regulations of the different Commodity Exchange should be consulted as the authoritative source for information, rules and contract specifications. PLEASE NOTE THAT THERE IS AN INHERENT RISK OF LOSS ASSOCIATED WITH TRADING FUTURES AND OPTIONS CONTRACTS. EMPLOYEES OF FUTURES TECHNOLOGY, LLC PROVIDE INFORMATION BASED ON SOURCES WE CONSIDER RELIABLE, BUT THERE IS NO GUARANTEE THAT THE INFORMATION WE PROVIDE WILL RESULT IN PROFITABLE TRADES. PLEASE CAREFULLY CONSIDER YOUR FINANCIAL CONDITION BEFORE INVESTING IN FUTURES AND OPTIONS CONTRACTS. FUTURES TRADING IS NOT SUITABLE FOR ALL INVESTORS. PAST PERFORMANCE IS NOT NECESSARY INDICATIVE OF FUTURE RESULTS. This Site is Designed, Built and
Maintained by Jerry Hodges |
ONE
TWO
THREE
FOUR
FIVE
SIX
SEVEN
EIGHT
NINE
EVEN
BUY
SELL
ONE
TEN 
SEVEN
NINETY
ONE HUNDRED
SEVEN HUNDRED
FIVE HUNDRED