Ring Trading

What Is Ring Trading?

Ring trading is the method by which certain types of investment business is led at the London Metal Exchange (LME), where trading activity happens in five-minute stretches known as "rings" inside a six-meter measurement circle (a specific type of trading pit) with two large display boards that show current prices. Every one of the ring-dealing members has a fixed seat inside the ring, behind which an assistant is permitted to remain to pass orders to the ring dealing member and to liaise with customers in regards to market conditions.

Ring trading, all the more extensively, may likewise allude to a trading pit.

How Ring Trading Works

On the London Metals Exchange, trading activity happens in designated five-brief periods known as "rings" during which traders and floor brokers participate in open outcry trading occurring in a six-meter ring-formed trading pit.

Ring sessions are isolated by trading instruments; for example, steel trading happens during the main session from 11:40 am-11:45 am (neighborhood time) and 1:10 pm-1:15 pm; and it stops trading at 4:20 pm. Ring trading at the LME happens between 11:40 am and 5:00 pm, with official telephone trading accessible 24 hours per day.

Every one of the ring dealing members has a fixed seat inside the ring, behind which an assistant is permitted to remain to pass orders to the ring dealing member and to liaise with customers in regards to market conditions.

Rings as Floor Trading Pits

All the more generally, a ring is a location on the floor of an exchange where trades are executed, all the more ordinarily alluded to as a trading pit. The circular or hexagonal arrangement (consequently, ring) where traders can execute with a counterparty is likewise alluded to as a pit, which is the preferred name for commodities markets.

For open-outcry trading floors and methods, the trading ring assumes an essential part in facilitating the course of price discovery. Price discovery is the overall interaction, whether explicit or gathered, where the spot price of an asset or service is laid out. Done well, it sets the fair price of a security, commodity, or currency based by utilizing different factors, primarily the levels of supply and demand.

Be that as it may, for most modern financial markets, open-outcry as a system of price discovery has been replaced by electronic methods organized through mechanized exchanges and matching systems. Rings, pits, and the vivid characters populating trading scenes from past times stay a nostalgic custom in numerous financial markets.

Features

• Here, trading activity happens in five-minute stretches inside a six-meter measurement circular ring with two large display boards that show current prices.
• Ring trading is the method by which certain types of investment business are led at the London Metal Exchange.
• Ring trading may likewise signify all the more generally the practice of open outcry floor trading that happens in trading pits.