Richard Donchian: Pioneer in Managed Futures

Richard Davoud Donchian (1905 - 1993) was a well-known Armenian-American trader in commodities and futures as well as an acknowledged pioneer in managed futures. In 1949, he started the world’s first publicly-managed futures fund, Futures, Inc., as well as developed several concepts including the trend timing method for investments in futures and the mutual fund concept for money management.

Indeed, he is considered as the father of the managed futures industry! He is also considered as the brains behind the development of a systematic approach toward the management of futures. He dedicated his professional trading knowledge and skills in promoting a more conservative approach toward futures trading.

Donchian has a bachelor’s degree in economics from Yale University. He has a master’s degree in business administration from the MIT Sloan School of Management. His first job was as shop assistant in the family-owned Oriental rug business, a time when he read the fictionalized biography of Jesse Livermore, a stock market whiz.

He became fascinated with the financial markets, studied them on a deeper level, and invested his money in them. He studied technical analysis and price history after losing money in the financial markets during the 1929 market crash, which would later serve him well.

In the 1930s, he began his career in Wall Street including the publication of Security Pilot, a highly popular stock market service, which was distributed to brokerage houses. He worked as a securities analyst and account executive with Hemphill, Noyes and Co. while still working as the Vice President for the family-owned business, Samuel Rug Company.

After World War II, Donchian was self-employed private investment adviser and securities analyst until 1960. He shifted his focus on active trading as well as development his rule-based technical trading system, which resulted in his creation of Futures, Inc.

He was a member of several stock exchanges and professional market associations, such as the New York Cotton Exchange and the New York Society of Security Analysts, throughout his career.