In a Windy City a long time ago . . .
Though some suspect the ancient Phoenicians and Greeks may have dabbled in futures trading, the modern futures market was born in Chicago with the establishment of the Chicago Board of Trade in 1848. Know as the hog butcher to the world, Chicago was also the commercial hub connecting Midwestern plains farmers with East Coast food merchants. Telegraph lines, railroads and shipping all passed through Chicago. It was to Chicago that Midwestern farmers came in the 1840s to sell the wheat that fed the world.
The crystal ball tells all . . .
Starting with the exchange of cash for the immediate delivery of wheat, trading gradually evolved into futures contracts in which a farmer would agree to deliver so many bushels of wheat to a dealer by a certain date in the future for an agreed price. Both parties benefited. The farmer knew how much he would be paid when he harvested his crop, and the dealer knew what his costs would be and how much wheat he could supply to his customers. Written contracts were often exchanged, sometimes with “guarantee” money. The Chicago Board of Trade (CBOT) came into being as a centralized location where buyers and sellers could meet, negotiate and finalize a contract. The first standardized “exchange traded” futures contract was listed on the CBOT in 1864.
Show me the money . . .
Contracts soon became so common that banks started accepting them as collateral for loans. Contracts also started to change hands before the delivery date. A farmer who couldn’t deliver his wheat might pass his obligation onto another farmer. A dealer who didn’t need the wheat might sell the contract to a dealer who did. Weather, locusts, disease, big harvests, flood, war, drought — all played a part in determining the final price of wheat when the crops were finally brought to market. In the interim, the contracts were traded back and forth. Soon the opportunity to make money on the trades attracted investors with no interest in the grain but a huge interest in the money! And the futures trader was born!
How to get some for yourself . . .
Today there are futures exchanges for wheat, eggs, petroleum, currency, metal, and other commodities. Futures trading still attracts people interested in those commodities and those who are fascinated by the potential to make money — lots of money. We can teach you how to do it! Click here to go to the Futures Trading Secrets website. Learn how to maximize your earning potential as a futures trader. The Futures Trading Secrets Course will teach you the success factors you need to master to make you a winner in the market. Click here to order the Futures Trading Secrets Course today.
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