Richard Davoud Donchian (b. September 1905, Hartford, Connecticut

Hartford, Connecticut

Hartford is the capital of the U.S. state of Connecticut. The seat of Hartford County until Connecticut disbanded county government in 1960, it is the second most populous city on New England's largest river, the Connecticut River. As of the 2010 Census, Hartford's population was 124,775, making...

  - d. 1993) was an Armenian

Armenians

Armenian people or Armenians are a nation and ethnic group native to the Armenian Highland.The largest concentration is in Armenia having a nearly-homogeneous population with 97.9% or 3,145,354 being ethnic Armenian....

-American commodities and futures

Futures contract

In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...

 trader

Trader (finance)

A trader is someone in finance who buys and sells financial instruments such as stocks, bonds, commodities and derivatives. A broker who simply fills buy or sell orders is not a trader, as they are merely executing instructions given to them. According to the Wall Street Journal in 2004, a managing...

, and pioneer in the field of managed futures.

The first publicly managed futures fund, Futures, Inc., was started in 1949 by Richard Donchian. He also developed the trend timing

Trend following

Trend following is an investment strategy that tries to take advantage of long-term moves that seem to play out in various markets. The strategy aims to work on the market trend mechanism and take benefit from both sides of the market, enjoying the profits from the ups and downs of the stock or...

 method of futures investing and introduced the mutual fund

Mutual fund

A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...

 concept to the field of money management

Investment management

Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...

.

Richard Donchian is considered to be the creator of the managed futures industry and is credited with developing a systematic approach to futures money management. His professional trading career was dedicated to advancing a more conservative approach to futures trading.

Biography

Richards parents were Armenian immigrants from Western Armenia

Western Armenia

Western Armenia is a term, primarily used by Armenians, to refer to Armenian-inhabited areas of the Armenian Highland that were part of the Ottoman Empire and now are part of the Republic of Turkey....

 which was part of the Ottoman Empire

Ottoman Empire

The Ottoman EmpireIt was usually referred to as the "Ottoman Empire", the "Turkish Empire", the "Ottoman Caliphate" or more commonly "Turkey" by its contemporaries...

 back in the 1880s and had come to settle in the USA. As a young man Richard went to school in Connecticut, later graduating from Yale University

Yale University

Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...

 with a BA

Bachelor of Arts

A Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...

 degree in Economics

Economics

Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

. Richards first taste of the job market was as an assistant in his family’s Oriental rug

Oriental rug

An authentic oriental rug is a handmade carpet that is either knotted with pile or woven without pile.By definition - Oriental rugs are rugs that come from the orient...

 business.

During this time Richard came across the biography

Biography

A biography is a detailed description or account of someone's life. More than a list of basic facts , biography also portrays the subject's experience of those events...

 of stock market whiz Jesse Livermore

Jesse Lauriston Livermore

Jesse Lauriston Livermore , also known as the Boy Plunger and "Great Bear of Wall Street", was an early 20th century stock trader...

 titled Reminiscences of a Stock Operator

Reminiscences of a Stock Operator

Reminiscences of a Stock Operator is a 1923 novel by American author Edwin Lefèvre which is the thinly disguised biography of Jesse Lauriston Livermore...

, After reading this book Richard became so fascinated that his interest turned to studying the financial markets. During the market crash of 1929

Wall Street Crash of 1929

The Wall Street Crash of 1929 , also known as the Great Crash, and the Stock Market Crash of 1929, was the most devastating stock market crash in the history of the United States, taking into consideration the full extent and duration of its fallout...

 he lost some money, this experience led him to study technical analysis

Technical analysis

In finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis incorporate technical analysis, which being an aspect of active management stands...

 and become a student of price history alone and for its own sake.

Richard began his Wall Street

Wall Street

Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...

 career in 1930s. Published a very popular stock market service called Security Pilot which he sold to brokerage houses

Stock broker

A stock broker or stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors...

. During the summer of 1933 he became an account executive and securities analyst

Securities research

Securities research is a discipline within the financial services industry. Securities research professionals are known most generally as "analysts," "research analysts," or "securities analysts;" all the foregoing terms are synonymous...

 with Hemphill, Noyes and Co, while still working as the Vice President of the Samuel Rug Company.

World War II would take Richard into the US military and participate in the invasion of Sicily and was later promoted to Air Force statistical officer. After the War he became a private investment adviser and securities analyst. Richard was self-employed until 1960 and in 1948 he changed his focus from securities analysis to active trading and developing his rule based technical system. He established the trading firm Futures, Inc., which was then one of the first publicly held commodity funds.

Richard developed a rule based trading approach which became known as Trend following

Trend following

Trend following is an investment strategy that tries to take advantage of long-term moves that seem to play out in various markets. The strategy aims to work on the market trend mechanism and take benefit from both sides of the market, enjoying the profits from the ups and downs of the stock or...

. It is based on the assumption that commodity prices moved in long, sustained moves. Richard developed and used a trading system that incorporated Trading rules, Trading guidelines, and his weekly rule system based on moving averages

Moving average (technical analysis)

In statistics, a moving average, also called rolling average, rolling mean or running average, is a type of finite impulse response filter used to analyze a set of data points by creating a series of averages of different subsets of the full data set.Given a series of numbers and a fixed subset...

. He wrote many articles on futures trading and securities and became known as the father of trend following.

In 1960 Richard was appointed Director of Commodity Research with Hayden Stone where he commenced writing a weekly newsletter Commodity Trend Timing based on his 5-20 moving average method. His newsletter was very popular reaching a weekly circulation of some 10,000 copies during the 19 years he wrote it. Richard wrote numerous articles which are considered industry classics, including Trend Following Methods in Commodity Price Analysis. Richard would remain with Hayden Stone's various successors including Shearson/American Express and later joined Shearson Lehman Brothers, eventually becoming Vice President of the firm.

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

Many modern trend following systems, such as the Turtle Trading system, are based on his work. The Richard Davoud Donchian Foundation was established after his death in April 1993; its aim is to make improvements in Children's Health and to help its ultimate recipients become empowered to strengthen and build up their families and communities—passing onto others that which was given to them.