Tick off the most significant developments in trading as Futures’ marks its 40th anniversary this year, and you come up with a pretty impressive list . . .
- Introduction of financial futures, beginning with currencies in 1972, then interest rates in 1975 and stock indexes in 1982, a progression that moved even the most sophisticated mainstream financial institutions into becoming participants in the futures markets.
- Options as a trading instrument, on stocks in 1975 and then on futures in 1983.
- Exchange-traded funds, launched in 1993 about 20 years after mutual funds.
- Electronic trading, which took off in 1993 with the introduction of Globex and advances in the new Internet.
- Evolution of exchanges and clearing organizations globally over the years that assured the integrity of trades . . . until confidence in the structure was shaken in late 2011 with the MF Global bankruptcy.
You could probably list more key trading developments in the 40-year history of Futures if you surveyed readers and traders. But, arguably, the most significant development of all may have been the introduction of the personal computer and the development of trading software that allowed individual traders to do their own advanced technical analysis and eventually to trade online.
In the first years after Todd Lofton launched Futures in February 1972, traders used graph paper, pencils and rulers to keep daily price charts by hand and slide rulers and hand-held calculators to compute technical indicators such as moving averages – unless a trader happened to have access to a company mainframe computer and a punch card machine.
The first personal computer software applications to trading were rather primitive, limited to performing simple mathematical calculations to add, subtract, multiply and divide numbers and to plot price charts. One such program available in the late 1970s was CompuTrac, started by a handful of traders. These early computer adopters relied mostly on TRS-80, Commodore or various Apple II computers running simple programs in the Basic programming language.
Still, the purchase of personal computers and trading software was limited to a handful of individual traders, as even the most sophisticated commodities/futures traders were unfamiliar with, and somewhat intimidated by, these new technologies and how they could be useful in analyzing market activity.
A trading software industry didn’t really exist in this time period and, at most, was a small cottage industry composed of just a few individual traders who developed software for their own use and were willing to share it with other traders for a fee to help defray the cost of development, getting feedback from other traders about what the next versions of the software should be programmed to do.