Futures trading is a powerful and flexible investment tool. It can make short term, medium term and long term investment. Besides, futures trading is very easy to learn and trade.
In Malaysia, Most popular is Two products which are FKLI (Futures Kuala Lumpur Index) and FCPO (Futures Crude Palm Oil).
How to start?
You only open an account with an investment broker firm and totally Free of Charge (FOC). You only provide a photocopy of IC and fill up the opening form then can trade after deposit margin. Certain products have certain margin requirement and there is different according.
Advantages of Futures Trading
First, we only FOCUS on a certain market. For example, we trade FKLI then we only focus on that market movements, not same like shares market as it have thousand over counters to monitor and analyse.
Second, futures trading is very flexible because it can buy (Long) or sell (Short) anytime, and not same like equity market as only can buy first sell later. Futures market is allow to short sell which sell first buy later. For example, you can foresee market will drop today, so you can sell the FKLI today and buy back later after market rebound then you make money in bearish market.
Third, Easy to make money. Low Commission rate charge on Futures market. Only earn 1 point then you can cover the cheaper commission charges while equity market brokerage charges is based on your purchase/sale contract value which amount can be huge.
FKLI is refer to our KLCI (Kuala Lumpur Composite Index). So both movement are almost same.
Minimum price flutuation 1 bid is 0.5point. Then it 1 point = RM50.
Margin requirement only RM2400 per contract; Intrday margin requirement only half of full margin.
Most active contract month is spot month ,expiry on end of the month (Last Day) and Cash-Settlement.
Trading Hour: 8.45am-12.45pm, 2.30pm-5.15pm
FCPO
Minimum price flutuation 1 bid is 1 point. Then it 1 point = RM25.
Margin requirement only RM5250 per contract; Intrday margin requirement only half of full margin.
Most active contract month is third month ,expiry on 15th of the every month and Physical delivery.
So we are not encourage to hold any position on spot month to avoid physical delivery.
Trading Hour: 10.30am-12.30pm, 3.00pm-6.00pm
*Margin requirement is change time to time.
Wednesday, 27 July 2011
Risk Management (Trading Rules)
First of all, this post is for all the beginner of Futures Traders.
For the starter, we must understand the products (Market).
Different market have different contract specifications. We must know it before we start to trade.
We can choose a product which we interested then we must monitor it on daily basis.
Second, we must PLAN first before enter market.
After we monitor, we must do some paper trading, that mean we trade on paper and not on real market. Do some homework before trade. For example, search some news and informations regarding that product, What factors affect it price movements and so on. After that, we accumulate all the datas and try to analyse it as well as formulise it become our own FORMULA.
Third, we set our TRADING RULES before enter market and DISCIPLINE during trading.
Set our own trading rules is for risk management. High Risk High Return, We must know our entry and exit point (Cut loss/Take profit), we set it before we trade so we can protect our capital through our discipline attitude. After we set trading rules, we must Follow the rules. Dont Greedy and flurried. Place order with confident.
Finally, we try to calculate our profit loss ratio must be >2:1
Profit loss ratio = Profit/loss.
That mean, Profit we must set more than 2 times than loss only 1 times. For example, we plan to take profit 20 points and cut loss only 10 points. If the probability of our success plan more than 60% then we can make profit every month.
For the starter, we must understand the products (Market).
Different market have different contract specifications. We must know it before we start to trade.
We can choose a product which we interested then we must monitor it on daily basis.
Second, we must PLAN first before enter market.
After we monitor, we must do some paper trading, that mean we trade on paper and not on real market. Do some homework before trade. For example, search some news and informations regarding that product, What factors affect it price movements and so on. After that, we accumulate all the datas and try to analyse it as well as formulise it become our own FORMULA.
Third, we set our TRADING RULES before enter market and DISCIPLINE during trading.
Set our own trading rules is for risk management. High Risk High Return, We must know our entry and exit point (Cut loss/Take profit), we set it before we trade so we can protect our capital through our discipline attitude. After we set trading rules, we must Follow the rules. Dont Greedy and flurried. Place order with confident.
Finally, we try to calculate our profit loss ratio must be >2:1
Profit loss ratio = Profit/loss.
That mean, Profit we must set more than 2 times than loss only 1 times. For example, we plan to take profit 20 points and cut loss only 10 points. If the probability of our success plan more than 60% then we can make profit every month.
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