The Futures Industry and the Underdog Stigma

Posted by Rick Tomsic on May 12, 2015 at 4:00 AM
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It seems as if futures trading has been the underdog of the trading world since before the Civil War, when many eyed futures traders with suspicion of the markets being an insiders-club open to a select few with elite connections in Chicago.

 

It took a long time for futures to gain economic acceptance and market legitimacy but futures contracts eventually gained a foothold, growing beyond physical commodities, and earning a spot at the derivatives table.

However, futures trading is still fighting to break free from the perpetual stigma of ‘underdog’ in a stock-heavy trading world. We believe it can and will break from the label -- we’re bullish on futures trading in 2015.

 

Before electronic trading took off in the early-2000s -- transitioning activity from the physical pits to the digital metaverse -- the phone was the primary channel a retail futures trader could use to execute trades. And while electronic trading has improved on the futures side, the technological progress made on the equities and options side is at least a decade ahead of futures trading.

 

Even as commodity trading rises to record volumes and specialized futures education initiatives emerge from exchanges, technological development still overwhelmingly favors equities and options. Technology tailored to retail futures trading has stalled until now.

 

But why?

 

Has there been a lack of futures trading innovation because futures are not treated as an equal to equities and options? OR are futures not treated as equal to equities and options due to the lack of innovation?

 

For years online brokers have avoided solving the 2-fold problem of addressing futures traders' needs.

 

The first half of this problem is a lack of investment in bringing new technology to the futures market. Instead of investing in a powerful core online futures trading system, online brokers have simply developed more bells and whistles positioned as futures trading enhancements.

 

Stigma-quoteThe other half of the problem is that there is a lack of focus on the end user’s experience. The needs of futures traders do not include more complexity and interface clutter, but less.

 

Futures traders require simplicity from the start; from an easy experience opening an account, to total cost transparency and savings, and clean technology that offers only the most useful tools for an interface that appears the same across devices.

 

I’m certain that the futures space is ready for massive disruption. Technology is key to moving futures trading toward being a simplified, widely accessible, and enjoyable experience not relegated to the back of the line.

 

Technology is key to getting futures on the same trajectory that equities and options have enjoyed a decade-long head start on.

 

In my own career I’ve witnessed the trials and tribulations that futures trading has gone through over many years; I began trading index options out of college and have built up a career in the financial industry which included starting an IB, founding an FCM, and holding executive positions with OptionsXpress, Schwab, and GAIN Capital.

 

And now I’m back as founder of Tradovate, an online retail futures trading solution which will provide a seamless next generation experience catering to the long-overlooked needs of futures traders.

 

My team and I will improve the futures trading experience and to reduce a trader’s barrier to entry.

 

Tradovate will address and disarm the common obstacles that discourage futures market participation: the disjointed onboarding process and awkward navigational learning curve that new traders experience, the complicated barrage of costs and the unnecessary interface clutter of esoteric tools.

 

We will address these overarching issues of inconvenience that have kept traders from experiencing the full potential of online futures trading.

 

We will champion futures and empower retail traders with long-overdue innovation in a next-generation platform affording them a cost-effective, seamless experience.

 

And even though it has been the underdog in the ring, our money is on a new futures trading experience in 2015.

 

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The official blog of Tradovate, exploring futures trading from issues to innovations.

 

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