Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 1 - Trading Introduction
Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 2 - Financial Products
Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 3 - Economic Principles
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THE ORIGIN

The futures market is the most suited to our style of trading as it has greater controls, is financially viable with plenty of opportunities for success, money management and risk/reward. The futures market is typically liquid enough to support various types of traders who have different end goals.

DateEvent
6 BCOne of the earliest futures contract is documented by Aristotle in the story of Thales, an ancient Greek philosopher who believed the upcoming olive harvest would be particularly large. Thales therefore entered into agreements with the regional olive oil pressing owners in exchange for a small deposit ahead of the harvest. This ingenuity by Thales meant he obtained the right to lease the presses at market prices during the harvest. Thales turned out to be right as the olive harvest was bountiful, and the demand for oil presses boomed. Needless to say, Thales made a lot of money!
5-15 ADThe European equivalent of these market beginnings were in medieval times where trade fairs were set up so buyers and sellers could exchange goods. The market fairs followed rules and regulations such as specific times and places to trade. Problems often arose from trade fairs because traders would have to carry large quantities of goods over long distances which could be fraught with dangers such as accidents, theft etc. The solution to this problem was solved with ‘Fair Letters’ where specific future delivery dates were arranged on the goods.
17th CenturyFutures Markets on the other hand were founded in Japan during the late 17th century. These markets facilitated rice ticket trading and the first known market was the Osaka Futures Market. Rice warehouses were developed by Feudal Lords where they could store and sell rice, thus offering them protection against price fluctuations between harvests. This concept grew into the first known futures exchange named the ‘Dojima Rice Market’ somewhere around 1600-1697. At the exchange merchants would gather to negotiate their rice tickets and these tickets could be used for existing rice stock or future production.
1830The US started to trade similar contracts between the 1830’s & 1840’s due to Mid-west problems with grain supply and demand. Futures were supposed to give buyers choice and certainty in grain arrivals and shipments, although as quality, delivery and payments were not guaranteed, this created problems during resale.
1848This led to the birth of the Chicago Board of Trade (CBOT) in 1848 and sometime in 1851 the earliest “forward” contract is recorded for 3000 bushels of corn. The CBOT then formalized grain trading by developing standardized agreements called “futures contracts”. Speculators were drawn into the markets in 1877 due to futures trading becoming more formalized.
1890’sIn the late 1890’s the Chicago Mercantile Exchange (CME) was also formed in the U.S, trading agricultural products.
1970In the 1970’s there was an emergence of major currency futures on the CME which has since help make it the largest futures exchange in the U.S.
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