What Is a Trading Room?
A Trading Room in binary option is pretty much anywhere that traders congregate to trade stocks, commodities and currencies on the financial markets. Other terms for a trading room would be “Front Office” or “Trading Floor”.
The facilities found in a trading room are often expensive to set up, run and maintain. High speed internet to keep track of the world markets, trading desks which have arrays of monitors and news and data feeds are all easier to finance if they are shared by a group of people. Facilities of this nature may also have shared training and reference libraries that traders can take advantage of.
There are different ways in which these facilities are financed and made available to traders. If a trader works for a money management institution, bank or finance house, as a full-time or permanent employee, then the company will pay for all the facilities and development that their traders need.
Freelance or self-employed traders often work from “Prop Houses”. These are establishments that set up trading rooms and then allow traders to use the facilities. The relationships vary.
In some cases the traders trade with the Prop House’s capital and take a share of the profit. The profit-share calculation would take into account the traders use of the prop house facilities. Other arrangements see the traders using their own money to trade with. They then pay a monthly fee for the facilities.
The fee paid by the trader will depend on the agreement he has with the prop-house and how sophisticated the facilities are.
The services that are most commonly supplied by the prop-houses are DMA services (or Direct Market Access), news or wire services like Bloomberg, Reuters and AFP. There are also market related blogs and television shows like The Squawk Box that provide ongoing analysis and forecasts that traders need to keep abreast of what’s happening in the markets they are trading and in political and international relations arenas, among other things.
Online Trading Room
As with everything, trading stocks, forex and securities is moving from the physical world to the online environment.
Before the internet made an impression, a trader needed physical premises to set up his business. This was expensive and a barrier for many people. The internet has changed the way the world does business, particularly where the physical aspects of the business can be represented by figures and charts.
These days, many Trading Rooms are virtual. Traders can join the trading equivalent of a chat room. They don’t have to leave home to set up or join a group of traders with common goals and interests. In other words, it is cheap and easy to set up a community of traders who can share information and assets. They can then also trade with their own funds or market their group as a trading firm dealing on the markets on behalf of clients.
Trading Room for Education
As trading rooms move onto the World Wide Web, the fundamental functions are realigning as well. Physical trading room is used to offer updates on markets and analysis of what was happening as the day progressed. They probably employed an in-house expert to do this. Now, any number of experts can be accessed online for a far wider range of opinions and analysis.
When it comes to learning and mentoring, there are hundreds of people offering their expertise to new and experienced traders for a fee.
Traders benefit from the experience of watching and speaking to more seasoned operators and are able to coach newer people, which is also a powerful way of learning. The learning process happens at all levels as traders watch others in action while at the same time discussing with them why they are doing what they are doing.
The same benefits are replicated in the online situation as people joining a virtual trading room are able to watch professional traders in action and are able to ask questions and follow detailed analysis.