THE FLOOR TRADER AND THE SPECIALIST 205

opportunity for a profit exists when prices are for the time
being out of line with true values.* Since as a rule he quickly
sells out purchased stock, and quickly covers his short sales, his
transactions are self-nullifying so far as any permanent effects
on security prices are concerned. Nevertheless, his swift purchases
 and sales tend temporarily to restrain rising and to
cushion falling prices, and, since they are normally undertaken
for only fractional profits, they help to create a close market.
[t is largely owing to the work of the floor trader that momentary
 inequalities in the market arising from the mechanical
methods of executing the round-share orders of commission
houses and odd-lot dealers are speedily smoothed out and eliminated.
 In the maintenance of a stock market whose prices are
constantly sensitive to supply and demand without erratically
responding to mechanical and temporary limitations and conditions,
 a quick dealer for small speculative profits like the floor
trader provides a very useful service.

Uninformed Prejudice Against the Floor Trader. The
floor trader could not afford to do business at such slight profits
in a less highly organized market than the Stock Exchange,
since he could not then be certain of buying or selling at will.
Hence, as a quick “in-and-out” dealer in securities, he is essentially
 a product of the modern continuous market which by a
process of evolution has been established on the exchanges.
The popular prejudice against him is basically due to the fact
that public knowledge has not kept up with the recent swift
development of organized markets. Because the floor trader's
operations differ from the operations of dealers in more primitive
 and sluggish types of market places, in features developed
by the recently created organized markets, they are apt to be
regarded as illegitimate gambling transactions. Critics of the
floor trader, lacking usually anything but an uninformed prejudice
 concerning his indispensable work in the market, fall back
upon the clearance system as proof of his villainy. It is of
“« Chapter V, p. 133.