The area on a trading floor of an exchange where traders gather to buy and sell contracts in a live face to face open outcry auction. The traditional trading pit was in the shape of an octagon, with steps line the area with terracing. This is so all the traders can get a good view of the action and be seen in order to make trades by flailing their arms and shouting out orders.
Additional meaning of Trading Pit:
Futures and Options exchange trading pits are some of the most intense, loud and exciting places within the financial markets.