Opportunities in Futures Trading

Published on December 2016 | Categories: Documents | Downloads: 41 | Comments: 0 | Views: 368
of 52
Download PDF   Embed   Report

Comments

Content

Opportunities in Futures Trading
Why Investors must also be Traders?

Chong Kim Seng CEO Bursa Malaysia Derivatives Berhad 24 September 2011 @ Bursa Malaysia

The time required to execute a trade has gone from minutes to milliseconds

Webs of linked hubs provide global access to markets

Nine telecommunications hubs in Europe and Asia New hub launched in Kuala Lumpur in May 2010

Which do you prefer?
• A Invest $10,000 to profit $1,000?

• B

Invest $1,000 to profit $1,000?

• Cash-on-Cash Return:

+ 10% versus + 100%

• Concept of LEVERAGE CONTROL & Trading on MARGIN

Five (5) Time Frames
• Very Short • Short • Medium • Long • Very Long

Two (2) Trading Statements On Prices

• Price is not something; Price is not anything; Price IS everything.

• Prices don’t move in a straight line.

1500

1700

1900

2100

2300

2500

2700

10/1/1987 10/22/1987 11/12/1987 12/3/1987 12/24/1987 1/14/1988 2/4/1988 2/25/1988 3/17/1988 4/7/1988 4/28/1988 5/19/1988 6/9/1988 6/30/1988 7/21/1988 8/11/1988 9/1/1988 9/22/1988 10/13/1988

DJIA Chart

Dow Jones Industrial Average Prices Trading vs Investing Opportunities
• Oct 16, 1987 = 2,246 • Oct 19, 1987 = 1,738 (-508 points or -22%) • Oct 19, 1988 = 2,137 (+399 points or +23%) • In-between Movements = 6,586 points or 15X

1000

1200

1400

1600

1800

600 1/2/2007 3/2/2007 5/2/2007 7/2/2007 9/2/2007 11/2/2007 1/2/2008 3/2/2008 5/2/2008 7/2/2008 9/2/2008 11/2/2008 1/2/2009 3/2/2009 5/2/2009 7/2/2009 9/2/2009 11/2/2009 1/2/2010 3/2/2010 5/2/2010 7/2/2010 9/2/2010 11/2/2010 1/2/2011 3/2/2011 5/2/2011 7/2/2011

800

FKLI

FKLI Trading vs Investing Opportunities
• High = 1,600 • Low = 800

• Range = 800 • In-between Movements = 12,661 points or 16X

CBOT - Wheat Prices Trading vs Investing Opportunities
• High = 1,300 • Low = 400

• Range = 900 • In-between Movements = 15,891 points or 17X

CBOT - Corn Prices Trading vs Investing Opportunities
• High = • Low = 800 300

• Range = 500 • In-between Movements = 9,739 points or 19X

CBOT – Soybean Prices Trading vs Investing Opportunities
• High = • Low = 1,650 650

• Range = 1,000 • In-between Movements = 18,261 points or 18X

CBOT – Soybean Oil Prices Trading vs Investing Opportunities
• High = • Low = • Range = 70 29 41

• In-between Movements = 665 points or 16X

FCPO – Crude Palm Oil Prices Trading vs Investing Opportunities
• High = • Low = • Range = 4,300 1,500 2,800

• In-between Movements = 43,948 points or 15X

Have a view…..and Trade!
• Momentum OR Contrarian • Fundamental Analysis (Supply & Demand) • Value Analysis (Intrinsic Value vs Price) • Technical Analysis (Price Charts) • Aberration Analysis (Price Dislocations)

Trading vs Investing…..
• Adjust mindsets & approaches… • Operate within shorter time frames… • Capitalize on in-between price movements… • Long /Short /LongShort /ShortLong vs Long Only... • Be equally versatile with buy first/sell later & sell first/buy later… • Be More Technical /Less Fundamental • Optimize leverage with risk management control

Four (4) Organizing Principles – Exchange Traded Products @ BMD
• Integrity • Price Discovery • Liquidity • Transparency

What you should ask for in Trading?
• Transparent Prices • Transparent Information Flows • Immediate Known Executed Prices • Control over Buy/Sell Decision Making

Decision Principle….
• Money ON the table / Money OFF the table • Stand ON the road / Stand OFF the road • Trade it down – Go Short • Trade it up – Go Long

• Decision Principle :

GET ON / GET OFF

Trading the World….
• Global Outlook… • Accessing locally… • Trading globally… • Trading as a life skill…

Futures Price vs Cash Price: Movement & Convergence

Futures Price
Convergence

Cash Price Time
Delivery

Two (2) Derivatives Products / Opportunities @ BMD

• FKLI – FTSE Bursa Kuala Lumpur Composite Index Futures Contract • FCPO – Crude Palm Oil Futures Contract

100

10

20

30

40

50

60

70

80

90

0 01/03/07 03/03/07 05/03/07 07/03/07 09/03/07 11/03/07 01/03/08 03/03/08 05/03/08 07/03/08 09/03/08 11/03/08 01/03/09 Mean 03/03/09 05/03/09 07/03/09 Mean Mean Mean 13 09/03/09 11/03/09 01/03/10 03/03/10 05/03/10 07/03/10 09/03/10 11/03/10 01/03/11 03/03/11 05/03/11 07/03/11 Mean High Low Diff

RM/MT

Mean =16.8 Mean = 21.2

KLCI Futures 5-year High Low Range

KLCI Futures Spot Month Daily Range (2007‐2011)

Mean = 12.8 Mean = 11.3 Mean = 13.6

100

200

300

400

500

0 01/03/07 03/03/07 05/03/07 07/03/07 09/03/07 11/03/07 01/03/08 03/03/08 05/03/08 07/03/08 09/03/08 11/03/08 01/03/09 03/03/09 05/03/09 07/03/09 Mean Mean Mean 13 09/03/09 11/03/09 01/03/10 03/03/10 05/03/10 07/03/10 09/03/10 11/03/10 01/03/11 03/03/11 05/03/11 07/03/11 Mean Mean FCPO 3rd Month

RM/MT

Mean = RM41 Mean = RM89 Mean = RM60 Mean = RM44 Mean = RM59

CPO Futures 5-year High Low Range
CPO Futures 3rd Month Daily Range (2007‐2011)

Agriculture vs Energy Price

Correlation FCPO vs WTI Crude

2001 ‐ Present 2006 ‐ Present 2010 ‐ Present 83.4% 72.6% 69.0%
15

Agriculture vs Precious Metal Price

Correlation FCPO vs Gold

2001 ‐ Present 2006 ‐ Present 2010 ‐ Present 84.4% 66.8% 57.6%
17

Agriculture vs Base Metal Price

Correlation FCPO vs Copper

2001 ‐ Present 2006 ‐ Present 2010 ‐ Present 82.2% 64.1% 89.2%
18

Asian Agriculture vs US Agriculture Price

Correlation FCPO vs Soybean Oil

2001 ‐ Present 2006 ‐ Present 2010 ‐ Present 96.5% 93.7% 90.9%
16

Definition of LUCK….
LUCK – Preparation meeting Opportunities….

Ducks will line up for those who are prepared… Be prepared…

Have two (2) accounts…..
• Investing Account – Securities • Trading Account – Derivatives

Two Important Requirements for Futures Trading
• Trade for Profits $$$

• Exercise Good Risk Management

Open a futures trading account. Be prepared.

www.bursamalaysia.com/derivatives

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close