SPECULATIVE TRANSACTIONS IN 1926 MAY WHEAT FUTURE 35 
portional relation to the quantity bought or sold, the dots in the 
chart would form along a straight line or some well-defined curve 
‘running diagonally from the lower left-hand to the upper right-hand 
part of the chart. Instead, however, the dots are scattered con- 
siderably and indicate only a general relationship between net quan- 
tities bought or sold and corresponding net price changes. 
To measure statistically the extent of correspondence between 
the large net trades and price changes included in this study, correla- 
tion has been used. ‘This takes into account not only the number of 
cases moving in the same and in opposite directions, but also the 
extent of movement in each case. | 
For the period April 18, 1925, to May 29, 1926, the net purchases 
and sales of over 500,000 bushels (all futures combined) were cor- 
related with the corresponding net price changes. The data used 
appear in the last two columns of Table 3. The results show a posi- 
tive correlation of +0.54, with a probable error of +0.03. By using 
only those days on which the net of purchases and sales was 1,000,000 
bushels or more, a correlation of +0.59 with a probable error +0.03 
was obtained. Finally,“ by comparing only those days having net 
trades of 2,000,000 bushels or over, a correlation of +0.66, with a 
probable error of -—-0.04 was obtained. These correlations indicate 
a significant direct relationship between the size of the net trades 
and the net changes in price. They indicate also that the larger the 
net trade not only the more certain it becomes that the price will 
move in the same direction, but also that it will move in proportion 
to the size of the trade. 
OPERATIONS OF SMALL TRADERS COMPARED WITH THOSE OF 
LARGE TRADERS 
SAMPLING AND CLASSIFYING MATERIAL 
As a concluding section of this study there is presented some 
information regarding the manner in which the members of other 
eroups trade in grain futures. It would be of interest to know how 
many people come into or leave the market with each price movement, 
their usual occupation, their financial capacity, and their previous 
experience in the cash grain and the grain-futures markets. Classify- 
ing the traders, it would be of interest to know just what group or 
eroups of traders profit and what groups lose, and the amount of 
money, gross and net, needed currently to maintain organized specula- 
tion in grain. Comprehensive information of this kind would reach to 
the fundamental issues, and would go far toward answering the whole 
question of the economic usefulness of future trading. To attain such 
a perspective, repeated sampling and testing of information is neces- 
sary, together with a gradual widening of the scope of each survey. 
The information in this section, although not complete, is illustrative 
of the way in which small traders responded to the operations of the 
large speculators in the 1926 May wheat future. Although only 
samples of the market are presented, they are believed to be represen- 
tative and to suggest some of the factors regularly at work in organized 
future trading. 
If one were to arrange, in the order of their size, the positions 
long or short of all of the traders in the market for one date, it would 
be found that thousands of the traders had positions that were long or 
