Futures Fundamentals: A Brief History
AAA
  1. Futures Fundamentals: Introduction
  2. Futures Fundamentals: A Brief History
  3. Futures Fundamentals: How The Market Works
  4. Futures Fundamentals: The Players
  5. Futures Fundamentals: Characteristics
  6. Futures Fundamentals: Strategies
  7. Futures Fundamentals: How To Trade
  8. Futures Fundamentals: Conclusion
Futures Fundamentals: A Brief History

Futures Fundamentals: A Brief History


Before the North American futures market originated some 150 years ago, farmers would grow their crops and then bring them to market in the hope of selling their inventory. But without any indication of demand, supply often exceeded what was needed and unpurchased crops were left to rot in the streets! Conversely, when a given commodity - wheat, for instance - was out of season, the goods made from it became very expensive because the crop was no longer available.

In the mid-nineteenth century, central grain markets were established and a central marketplace was created for farmers to bring their commodities and sell them either for immediate delivery (spot trading) or for forward delivery. The latter contracts - forward contracts - were the forerunners to today's futures contracts. In fact, this concept saved many a farmer the loss of crops and profits and helped stabilize supply and prices in the off-season.

Today's futures market is a global marketplace for not only agricultural goods, but also for currencies and financial instruments such as Treasury bonds and securities (securities futures). It's a diverse meeting place of farmers, exporters, importers, manufacturers and speculators. Thanks to modern technology, commodities prices are seen throughout the world, so a Kansas farmer can match a bid from a buyer in Europe.

Futures Fundamentals: How The Market Works

  1. Futures Fundamentals: Introduction
  2. Futures Fundamentals: A Brief History
  3. Futures Fundamentals: How The Market Works
  4. Futures Fundamentals: The Players
  5. Futures Fundamentals: Characteristics
  6. Futures Fundamentals: Strategies
  7. Futures Fundamentals: How To Trade
  8. Futures Fundamentals: Conclusion
Futures Fundamentals: A Brief History
RELATED TERMS
  1. Bid Wanted

    An announcement by an investor who holds a security that he or ...
  2. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position ...
  3. ISDA Master Agreement

    A standard agreement used in over-the-counter derivatives transactions.
  4. Hindsight Bias

    A psychological phenomenon in which past events seem to be more ...
  5. Paper Trade

    Using simulated trading to practice buying and selling securities ...
  6. Circus Swap

    A combination of an interest rate swap and a currency swap in ...
  1. What is the minimum amount of money that I can invest in a mutual fund?

    Learn about investing in mutual funds even with a smaller initial investment; there are many funds available to investors ...
  2. How do I sign up for a TreasuryDirect account?

    Invest in Treasury securities by dealing directly with the U.S. Department of the Treasury online, conveniently managing ...
  3. How can I get a mutual fund prospectus?

    Read and understand the prospectus before investing in a mutual fund. You can obtain a copy from the fund company, your financial ...
  4. Can I purchase mutual funds for my IRA?

    Learn how to invest your IRA assets in mutual funds. Discover a few of the different types of mutual funds available for ...
Related Tutorials
  1. Investing For Safety and Income Tutorial
    Bonds & Fixed Income

    Investing For Safety and Income Tutorial

  2. American Depositary Receipt Basics
    Economics

    American Depositary Receipt Basics

  3. Stock Basics Tutorial
    Investing Basics

    Stock Basics Tutorial

  4. Top ETFs And What They Track: A Tutorial
    Mutual Funds & ETFs

    Top ETFs And What They Track: A Tutorial

  5. Introduction to Stock Trader Types
    Active Trading Fundamentals

    Introduction to Stock Trader Types

Trading Center