Futures Trading

Written by Jacey Harmon
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Futures trading has been around for thousands of years. Futures markets were around in ancient Greece and Rome trading a variety of different commodities. In the 10th century, the world's first organized futures market was established in Italy. By the 15th century, futures markets were located in London, Brussels, and Amsterdam, trading commodities such as grain, woods and metals.

The Royal Exchange was founded in London in the late 1500s. The Royal Exchange was the first exchange designated for futures trading. The success of the exchange allowed London to act as the world's epicenter for financial markets in the 1700s. By the mid 1800s Chicago was quickly becoming a futures trading powerhouse.

History of Futures Trading in the United States

The Illinois state legislature created the Chicago Board of Trade (CBOT) in 1848. The CBOT was the first cash based commodities exchange in the United States. By 1865 the CBOT created rules allowing for futures trading. These rules governed delivery, payment and margin for futures traders.

Today there are 13 futures exchanges in the United States. There are three main areas for futures trading. Commodities futures such as grain, energy and livestock are the most commonly traded. Financial futures regarding interest rates and currencies are available for futures traders. Index futures that are based on equity and commodity based indexes are the final type of futures available for trade. The futures markets trade in excess of 400 million contracts every year in the United States.


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