It’s a common sight on the nightly news- a wild crowd of people standing or running about, tightly grouped, who are shouting and waving fistfuls of paper. If you’ve never had any experience with the futures market, a day on the trading floor can seem confusing.

Actually, everyone in the crowd knows exactly what’s happening. It’s almost like another language. Learn that language and you’ll also know what is going on.

Today’s futures trading floor is much different than it was when it first began quite a long time ago. Back before there was an actual futures market, those who grew fruit, grain and vegetables would cart their crops to a major town or city and try to sell them.

Because a lot of farmers had the same idea, at the same time, demand and the average price would be a lot lower. Demand would be lacking, and supply would be too high. Conversely, in the spring demand would be raised, and commodities and crops would be in very low supply.

Initially, the first organized and central marketplaces were created to provide spot prices for immediate delivery. Shortly thereafter, forward contracts were also established. These ‘forwards’ were forerunners to the present day futures contract.

It doesn’t really matter where the buyer or seller is, they will get the same general information that everybody else has. Farmers, banks, producers, and companies can very easily buy or sell- the only thing they need to do is to contact their broker.

Regardless of the speculator’s location, the playing field is leveled because everyone has access to the exact same information. It could be one of your competitors who takes your trade, or another speculator.