Question

What is the difference between an auction market and an open outcry market?

Answer 1

In an auction market the buyers enter competitive bids and sellers enter competitive offers at the same time. The bids are put for stocks and securities and the price at which a stock or a security is traded represents the maximum price or the higher price that a buyer is willing to pay. It also represents the lowest price that a seller is willing to accept for the stock or security being sold by him.

In an open outcry market the way orders from sellers and buyers are matched is different. The communication in this market is done through use of hand signals as well as shouting. There is no shouting in an auction market. Also in case of an open outcry market, unlike an auction market, trading takes place in trading pits and the pits are part of trading floors.