You can remember this by thinking that when you’re buying, you’re bringing something in toward you. When indicating you want an offer to buy (signaling a bid), the palm of the hand always faces toward you. But take note: Some signals may mean one thing in a certain pit, while a similar signal may mean something entirely different in another pit. Some are unique to particular pits on the CME floors. This presents the signals most commonly used at CME. When price discrepancies emerge in the marketplace, the arbitrageur buys/sells until it is no longer profitable, or until prices are back in equilibrium.) Hand signals met the need to speed up communication in the fast-moving financial futures pits. (Arbitrage refers to the simultaneous purchase and sale of the same or an equivalent commodity or security to profit from price discrepancies. Why? Because traders discovered they could take advantage of arbitrage opportunities between CME and other markets if they could trade quickly enough. Although speed had long been a key element in futures trading, it became even more important when financial futures entered the trading scene. futures exchange to offer financial (rather than commodity-based) futures. Hand signals began being used extensively at CME in the early 1970s, after the Exchange created the International Monetary Market (IMM) and became the first U.S. Hand signals make it easier for customers to remain anonymous, because large orders do not sit on a desk, subject to accidental disclosure. Hand signals are more practical than voice communication because of the number of persons on the floor and the general noise level. Hand signals enable fast communication over what can be long distances (as much as 30 or 40 yards) between the pits and order desks and within the pits themselves. The signals are the favored form of floor communication, especially in the financial futures pits, for three main reasons:
The signals let traders and other floor employees know how much is being bid and asked, how many contracts are at stake, what the expiration months are, the types of orders and the status of the orders. Hand signals – the sign language of futures trading - represent a unique system of communication that effectively conveys the basic information needed to conduct business on the trading floor.
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