CHAPTER 12 More on Futures

I started in this business trading futures. At that time, there were only commodities, agricultural products and metals; not even energy. When my orders in grains got big enough, I was able to go on the floor with my broker. It was exciting. I would give him a price to buy a million soybeans and he would run into the pit, wave his arms, and come back out saying, “Filled.” I saw it as the ultimate in free trade.

One day, all the grain markets were limit up. That’s when prices have gone as far as allowed in one day. In this case, it was an unexpectedly bullish crop report. Very little happens at limit up and the floor was remarkably quiet, just a few contracts trading hands at the limit price every few minutes. I was just thinking of leaving because nothing was happening.

Before I say more, let me describe the layout of the trading floor at the Chicago Board of Trade. I’m in the back left corner of a very large room at the soybean pit. To the far left are two wide doors, one in each corner. So the farthest door is diagonally across from me, the farthest point in the room. The trading pits all line the outside of the room, and are different sizes based on the activity of that commodity. Corn is the biggest, soybeans the next largest. Gold, destined for failure, was small.

Having just made my decision to leave for lunch, there was a murmur at the pit farthest from me, near one of the doors. The murmur got quickly louder. My broker’s ears were standing ...

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