Stock markets are equated with finely dressed men in ties and immaculate suits struggling in trading pits. The frantic hand gestures, chaos, and adrenaline pumping through them are often glorified in films. An element that seems out of place in those cinematic sequences is the use of bright jackets.
Stock market traders wear vibrant jackets because they help in recognizing the team in a crowd. Communication has to be rapid while trading in open outcry. The hyperactivity on the trading floor keeps the temperatures hot, and with a dress code so severe, the traders needed an easy solution.
This article explains the trading jacket and its role in an open outcry. It sheds light on the waning open outcry system in the stock exchange and chronicles the unique garment’s future. Finally, it covers the best attire for you as a trader.
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
Table of Contents
What Is a Trading Jacket?
Trading jackets are blazers worn by traders engaged in an open outcry in a trading pit. It is a brightly colored, distinctive piece worn by traders to find their firm and fellows with ease.
The trading jacket can be personalized. It must have the company logo and unique emblem of the trader. The pit’s spontaneous and heated environment made it difficult for traders to survive the stimulating environment in stifling blazers.
The trading jackets were specially designed with mesh and other breathable materials to keep the traders comfortable and calm. Since the era of open outcries has passed, stock market traders’ jackets are now considered collectibles in the memory of a career as a successful financial trader.
Nick Leeson’s striped jacket from Barings Bank is one of the prime examples of a trader’s jacket being given enough attention to be auctioned for £21,000. Currently, most exchanges use electronic systems.
What Is an Open Outcry?
Open outcry is an outdated system that was prevalently used in future and stock exchanges. This practice was normalized in all stock exchanges after its establishment in the Amsterdam Stock Exchange during the 17th century. Today, the pioneer of open outcries is called Euronext Amsterdam.
Hand signals and a few words are used to communicate about the acceptance and intentions amongst traders in the trading pit. Each exchange had its language of non-verbal communication, where gestures are used to indicate a special message. The competition for orders in a trading pit is similar to the environment of an auction.
Outsiders often criticize the chaos of open outcries. However, the reality differs, as the sheer complexity of the environment makes it challenging to decipher the meanings of multiple messages floating simultaneously in the enclosed space.
It is observed that the signals for each type of buy or sell differ from one another in terms of the quantity and price for the trade. The open outcry system was kept in check by the book of all open orders for each stock group. The traders in the pit usually communicated in a series of actions that may seem similar to the Morse code due to the secrecy surrounding it.
This is why it was necessary to have an easy system for recognizing your colleagues to process the transactions without wasting a single moment. The bright-hued jackets proved to be very handy in this regard.
Has the Trading Pit Lost Its Glory Forever?
Today, most of the stock exchanges have adopted electronic systems. The physically exhausting trades of the pit have been abandoned since the 1980s since the development of automated phone trading.
The trading pit was once the center of all communication and commotion in the stock exchange. However, with the advent of computers in the 1990s, it was left looking like a computer lab. The electronic trading platforms were far more efficient and required less manual effort than the traditional method shown in Trading Places (1983).
The London Stock Exchange in 1986 was the first exchange to transition to a completely automated system; the Milan Stock Exchange (Borsa Italiana) was next in 1994, with Toronto Stock Exchange the following suit in 1997.
Some of the world’s major stock exchanges stopped using the pits nearly fifty years ago. The more straightforward process and incredible speed of automation ensured accuracy in the trade. It led to the reduction of costs and directly cut down the manipulation from conniving brokers.
The seismic shift towards electronic systems allowed retail investors to conduct trade independently and removed the middlemen that were brokers, executives, and dealers, out of the picture. The support from the retail sector ensured that the electronic systems resisted the opposition from the orthodox traders. Their tactics of finagling cuts from the trade started suffering immediately.
It is safe to say that jackets are more of an anachronistic practice today, but the open outcry system is deeply ingrained in the stock exchange systems. The Chicago Mercantile Exchange is another exchange that had resisted the change until 2015. It shows no signs of disappearance from the New York Stock Exchange because the market mammoths are still interested in the pit.
The existence of the trading pit in modern stock exchanges no longer makes sense to the post-modern stakeholders. Still, a few schools of thought believe eliminating the open outcry system can have unfortunate outcomes. The firm belief in the human mind’s intuitive abilities is preferred immensely over the programmed intelligence of digital solutions.
The automatic behaviors in the pit make it easy to gauge the intentions behind each movement. Another proponent of trading pits and open outcries is the assurance of the human touch. The dynamic human abilities for crisis management indicate that the trading bits may longer be glorious. Still, they will continue to exist for an uncertain number of years in the future.
The Future of the Flashy Trader Jackets
Back in the day, the vibrant jackets for traders from New York and Chicago were a popular demand for the local areas’ tailoring industry. As the trading pits continue to wither away, the demand for the novelty item has similarly dried up.
Companies like PECO Inc. have a long history of producing flashy jackets for the trading pit, but since the screens with crosses and zeroes have taken over the stock market, there is no need for the colorful pieces.
Furthermore, the shutdown of significant trading pits in 2015 has finally pushed the production over the edge. The garment is mostly adorned on film sets like Gotham City from The Dark Knight Rises (2012). The strict dress code of stock exchanges in Chicago is now a fond memory of a time gone by when a failure in compliance led to fines up to $500.
The dress code of stock exchanges has relaxed since society has evolved out of superstitions and superficial details. The attire of the trader no longer changes the impression of the securities they represent. Most of the trader jackets hang in the closets of retired traders or are lying in the containers inherited by stock traders’ children.
What Should You Wear as a Trader?
Nowadays, traders get to wear pretty much anything they want. The freedom of choice may paralyze some. So, let’s discuss what you should wear as a trader. You should opt for a sharp suit and a clean-cut look to present an aura of professionalism and signal success.
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Conclusion
The trading jacket has enjoyed an era of glory in the global stock exchanges. It has played an enormous role in easing the path of open outcry trading in the pit for more than two centuries.
Today, trading pits and jackets have been limited to symbolic reference only. As the orthodox methods continue to wane and wither, it is apparent that these jackets will soon be seen in virtual museums.
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
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