I recently had a conversation with industry stalwart and head of Wedbush Futures Carl Gilmore, and he mentioned that he and other leaders in the FCM space have had discussions wondering who will be the leaders of the industry 20 years from now.
He wasn’t pining for the floor but knew that most leaders had their formative years on the trading floors. Of course, notable exceptions are CME Group CEO Phupinder Gill and Intercontinental Exchange (ICE) Chairman and CEO Jeff Sprecher.
Still, I understood what he meant.
Those of us who had spent a considerable amount of time on the trading floor understand as well. We all have had similar conversations regarding the difficulty in explaining to a spouse or friend how it all works. It is one thing to learn something in a book and quite another to live it. That is why anecdotes from significant—and not so significant—events on the floor, or “floor stories,” are so compelling (see “Tales from the pit"). There is comedy and drama there.
To see the markets working live with the flurry of people and movement of prices and the different levels of noise that accompany certain activity, paints a three-dimensional picture that captures its essence, which can’t be duplicated in a book or seminar.
All of your senses are at work. If you talk to the old timers, nearly all, man or woman, say their attraction to the industry was a visceral one based on their interaction with the floor. The excitement of it. It wasn’t simply the idea that great sums of money could be made but the idea of action.
What is replacing those market makers and traders largely is high-speed algorithmic traders. Perhaps it is more efficient. It can be and it also can be an attempt to game the market—something that occurred in the heyday of the floor as well. In that sense it is just about the changing tools used to exploit opportunities.
However, you won’t find the passion and love there. Those programmers will go to where the opportunities are. That is not good or bad, it is simply reality. The question is: How will this new reality affect markets? A computer coding algorithm course — even with the promise of big bucks — is not going to draw the young risk-taker into the futures markets the way the action of the floor did.
Perhaps the young gamers who will be the traders of the future will get that same rush trading as they do with “Total War,” or whatever the popular game of the day is.
Transitions can be tough but they also can be invigorating. Futures will be going through a transition of its own in the coming months. We have been having an internal debate over this transition because we have always been more than a trading magazine.
Futures launched as Commodities magazine in 1972 (This month’s cover pays tribute to Commodities debut cover); in September 1983 we changed our name to Futures because with the influx of financial futures, Commodities no longer encapsulated all that we covered. Even at the time of that change, Futures was a bit limiting and didn’t define all that we covered.
We had been at the forefront of the emergence of the Chicago Board Options Exchange and the listed options markets. We also were at the forefront of the explosion of systematic trading and the growth of the commodity trading advisor universe thanks to the emergence of the personal computer. Many of the groundbreaking works of technical analysis and trading system development were featured in the pages of Futures.
In this issue we include a review of Richard (Doc) Sandor’s new book, “Sustainable Investing and Environmental Markets: Opportunities in a New Asset Class,” which he coathored with three others. Sandor represents both a bridge to the emergence of financial futures, which signified our move from Commodities to Futures magazine, and a bridge to the future with his work in environmental markets. Sandor wrote a piece on the use of computers in trading in the very first issue of Commodities. It is a good metaphor for what we have attempted to accomplish over the year and will continue to work on.
We have covered commodities, interest rates, equities, forex and any market traders were interested in from all sides. Simply put, we have been a guide for the modern trader, offering analysis and strategies: Cutting-edge and time-tested. It is something we are proud of and something we pledge to continue as markets change.
We will strive to offer some new features as well. Hence the debate. In a sense we will be doing what we always have done. The industry has looked to Futures to cover trends: in trading, markets, system development and regulation. We have profiled key players inside the futures world and in the world in general, as everything affects markets.
Our contributors have offered futuristic strategies and reached back in time to apply proven trading methods to new markets. In “Darvas box trading: A 21st century blueprint," Billy Williams updates a classic and demonstrates how the modern trader can learn from the past.
It is what we have always done and will continue to do.