opportunities in futures trading

8/2/2019 Opportunities in Futures Trading

1/52

Opportunities in Futures TradingWhy Investors must also be Traders?

Chong Kim Seng

CEOBursa Malaysia Derivatives Berhad24 September 2011 @ Bursa Malaysia


2/52


3/52


4/52


5/52


6/52


7/52


8/52

The time required to execute a tradehas gone from minutes to milliseconds


9/52

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


10/52


11/52


12/52

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


13/52

Five (5) Time Frames

Very Short

Short

Medium

Long

Very Long


14/52

Two (2) Trading Statements On Prices

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

Prices dont move in a straight line.


15/52

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

DJIAChart


16/52

Dow Jones Industrial Average PricesTrading 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


17/52

600

800

1000

1200

1400

1600

1800

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

FKLI


18/52

FKLITrading vs Investing Opportunities

High = 1,600

Low = 800

Range = 800



19/52


20/52


21/52

CBOT - Wheat PricesTrading vs Investing Opportunities

High = 1,300

Low = 400

Range = 900



22/52


23/52


24/52

CBOT - Corn PricesTrading vs Investing Opportunities

High = 800

Low = 300

Range = 500



25/52


26/52


27/52

CBOT Soybean PricesTrading vs Investing Opportunities

High = 1,650

Low = 650

Range = 1,000



28/52


29/52


30/52

CBOT Soybean Oil PricesTrading vs Investing Opportunities

High = 70

Low = 29

Range = 41

In-between Movements = 665 points or 16X


31/52


32/52


33/52

FCPO Crude Palm Oil PricesTrading vs Investing Opportunities

High = 4,300

Low = 1,500

Range = 2,800



34/52

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)


35/52

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 & sellfirst/buy later Be More Technical /Less Fundamental Optimize leverage with risk management control


36/52

Four (4) Organizing Principles ExchangeTraded Products @ BMD

Integrity

Price Discovery

Liquidity

Transparency


37/52

What you should ask for in Trading?

Transparent Prices

Transparent Information Flows

Immediate Known Executed Prices

Control over Buy/Sell Decision Making


38/52

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


39/52

Trading the World.

Global Outlook Accessing locally Trading globally

Trading as a life skill


40/52

Time

Futures Price

Cash PriceConvergence

Delivery

Futures Price vs Cash Price: Movement & Convergence


41/52

Two (2) Derivatives Products / Opportunities@ BMD

FKLI FTSE Bursa Kuala Lumpur Composite

Index Futures Contract

FCPO Crude Palm Oil Futures Contract


42/52

KLCI Futures 5-year High Low Range

13

0

10

20

30

40

50

60

70

80

90

100

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

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

RM/MT KLCIFuturesSpotMonthDailyRange(20072011)

HighLowDiff Mean Mean Mean Mean Mean

Mean=16.8

Mean=11.3

Mean=13.6

Mean=12.8

Mean=21.2


43/52

CPO Futures 5-year High Low Range

13

0

100

200

300

400

500

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

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

RM/MT CPOFutures3rdMonthDailyRange(20072011)

FCPO3rdMonth Mean Mean Mean Mean Mean

Mean=RM41

Mean=RM44

Mean=RM59

Mean

=

RM60

Mean=RM89


44/52

Agriculture vs Energy Price

15

Correlation 2001 Present 2006 Present 2010 Present

FCPOvsWTICrude 83.4% 72.6% 69.0%


45/52

Agriculture vs Precious Metal Price

17


FCPOvsGold 84.4% 66.8% 57.6%


46/52

Agriculture vs Base Metal Price

18


FCPOvsCopper 82.2% 64.1% 89.2%


47/52

Asian Agriculture vs US Agriculture Price

16


FCPOvsSoybeanOil 96.5% 93.7% 90.9%


48/52


49/52

Definition of LUCK.

LUCK Preparation meeting Opportunities.

Ducks will line up for those who are preparedBe prepared


50/52

Have two (2) accounts..

Investing Account Securities

Trading Account Derivatives


51/52

Two Important Requirements forFutures Trading

Trade for Profits $$$

Exercise Good Risk Management


52/52

Open a futures trading account.Be prepared.

www.bursamalaysia.com/derivatives

opportunities in futures trading

Documents