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Floor Trader (FT)

A floor trader is an exchange member who is permitted to trade for their own account from the floor of the exchange. Floor traders have certain privileges over other participants in the exchange, such as preferential access to certain trade orders and pricing information. Floor traders generally specialize in certain types of futures and options, and typically work in groups.

Floor traders are the first to know when an order has been placed, and they often act quickly on behalf of a buyer or seller. They typically relay orders through hand signals and may use hand-held devices to communicate with buyers or sellers. Floor traders must adhere to trading rules set by the exchange, and are subject to self-regulatory oversight by the Financial Industry Regulatory Authority (FINRA).

Floor trading offers several advantages, including allowing traders to react swiftly to market changes, as well as allowing them to spread out large orders without dramatically impacting the price. It also presents the opportunity for them to use their knowledge of the market to capitalize on market inefficiencies.

While floor trading has been in use for centuries, it has largely disappeared in recent decades as more and more exchanges have shifted to electronic trading. Electronic trading is much faster and more cost effective than floor trading, and provides an even playing field for traders of all types. Many exchanges have closed their trading floors altogether, forcing floor traders to transition to electronic trading in order to remain competitive.

Overall, floor traders are an important part of the exchange landscape, though their numbers have become increasingly rare as electronic trading becomes more prominent. However, their knowledge of the markets can provide an invaluable resource to those who are looking to take advantage of market inefficiencies. As long as there are exchanges, there will likely be some form of floor trading in existence.

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