Blackboard Trading

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Blackboard Trading

What Is Blackboard Trading?

Blackboard trading is a defunct technique in which exchange trading depended on scrawled bid and offer prices on blackboards.

Key Takeaways

  • Blackboard trading is an old-school method of displaying bid and ask prices on a blackboard.
  • The telegraph gradually supplanted the usage of blackboards.
  • Quotations are now priced electronically, rendering telegraph and blackboard quotes obsolete.

How Blackboard Trading Works

Blackboard trading was a time-consuming practice in which traders manually recorded bid and offer prices on massive chalkboards that lined the walls of an exchange. Their usage started to wane in the late nineteenth century, as dealers began to utilize the telegraph to track ticker prices. The introduction of automated quotation boards in the 1960s, as well as the necessity for more effective means of spreading quotes, rendered blackboard trading obsolete. The sluggish trading speed required by the use of blackboards made meeting demand for higher trade volumes problematic.

The introduction of computerized trading finally addressed the efficiency issue, rendering floor trading and, by extension, floor trading employees such as experts and runners largely obsolete. In 1971, the Nasdaq exchange pioneered automated trading, and the majority of the industry has not looked back since. While a small number of exchanges continue to depend on floor trading, electronic options operate alongside them and account for the majority of trade volumes.

From Blackboard to Circuit Board

The large chalkboard that enabled trading on the New York Stock Exchange in its early days also gave birth to the exchange’s moniker, the Big Board.

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Subsequent investment technologies have produced artifacts that are still in use today, most notably the transmission of quotations through telegraph. For over a century, devices known as tickers transformed electrical impulses sent via telegraph cables into letters and numbers that corresponded to stock quotations. This gave rise to the name ticker symbol, which has outlasted the usage of ticker tape among brokerage houses eager to read and react to quick quotations. The ticker tape parade, which still welcomes victorious sports teams and returning civic heroes, got its name from the usage of old ticker tape as confetti thrown out of office windows.

Through the 1960s, electronic quote boards capable of showing current prices replaced tickers, ultimately giving way to computerized price information originally given via a device known as a Quotron. The ubiquity of Bloomberg terminals rendered Quotron devices useless, ushering in the age of computer-delivered real-time stock quotations.

The ease with which private investors may get real-time stock quotations has resulted in significant shifts in financial markets. High-frequency trading, day trading, and other tactics that rely on fast reactions to price swings would have been very difficult to implement when investors had to check the chalk to price a deal.

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