Many traders are familiar with pit noise. With the advancement of technology, any trader can receive live pit noise directly on their computer for a nominal fee. Although the edge of being a floor trader does exist, that edge has signficantly reduced over the past decade. With level 2 quotes, fast execution, pit noise, etc.... private traders are now playing on a equal field to floor and insitutional traders.
Pit noise is crucial if you are an intraday trader. I can not imagine trading without it. For those who are unfamiliar with pit noise, this thread is for you.
The main channel that should be used in intraday trading is the big S&P 500 pit noise. This is where the big boys play. The S&P 500 usually takes the lead, followed by the dow/russell/nasdaq, and equities. So understanding pit noise gives you a slight edge and sometimes a heads up signal before price.
At first, pit noise can sound annoying and complicated. To a new trader none of the lingual will make any sense. Constant yelling of numbers, names of market makers, top tens, etc... You will first need to learn the terms. A full comprehensive list can be found here.
CLICK HERE FOR PIT NOISE LIST
Go over the list and learn the basic terms. Listen to the pit noise afterwards, you will be surprised at how much information one can absorb from all that chaotic noise.
Obtaining pit noise is easy. This can cost anywhere from $100 - $200 a month but is worth every penny. Do a google search on pit noise or private message me. I may be able to send you a special discount offer from my former vendor.
Here are a couple things you need to know when listening to the pit noise.
1. The commentator or speaker can become very emotional and energetic when order flow is heavy. Try not to get over reactive yourself. Stick with your plan. Use pit noise as a different set of tool for your trading.
2. The pit is the noisest in the opening hour and last hour. Also, you will be able to determine if the pit is crowded or not just by the level of the noise. The pit gets dull before national holidays. You can tell if a market is going to be choppy and nontrending just by listening to the level of excitement in the pit.
3. The pit is the center of human emotions. You can hear the voices of panic and greed. If pit noise is extremely high during a uptrend or downtrend, this is a good confirmation of a valid trend.
4. Watch out when pit noise becomes quiet after a trend. This usually indicates lack of interest and prices will slowly reverse or chop around.
5. Listen carefully to determine who is holding the bid or offer. Many times you will hear "paper seller", "locals selling into strength", "Goldman a buyer now", etc... Enough of these and can lead to a short term reversal.
6. Learn to filter out reliable information from noise. Floor traders play middleman to provide liquidity. They do not move price. What moves price is the other time frame buyer or seller that steps in. Recognize the difference.
7. Listen to pit noise for some time until you fully understand it. Most importantly understand the level of noise. On a scale from 1 to 10, one indicates no interest. Ten indicates extreme emotions.
If you have any questions, post them here. I will be glad to answer any questions.
