FKLI Futures Trading - Bursamalaysia
This will chronicle trading in the FKLI & FCPO futures. If you don't like what you see/read in this blog, just surf away. These opinions are our personal opinions and just a record of our thoughts..."In evolution, it’s not the biggest, the fiercest nor the smartest that survive, it’s the one that changes the fastest.” I.e. the key word is to adapt the trading style to the markets, until it stops working
Friday, June 29, 2007
Thursday, June 28, 2007
Wednesday, June 27, 2007
20070627 1230. FKLI collapses with the regional markets. Jul FKLI trades at 1340 at 1230 pm, which iis a full 21 points from the sell signal yesterday. Those who take on the risk of holding positions short would benefit from such a gap down and trend day move like today.
We alluded to fact that the small cap stocks were up and big caps dropped for the past few days. Now we know, small caps are retail/syndicate driven=dumb money, and big caps are institutional and big boys=smart money.
Tuesday, June 26, 2007
20070626 1715. FKLI did trade 1361, the lower breakout level. However no follow through. (maybe it was too close to the closing) Shorts would be underwater by 2 points at the close. It is important to have a plan when trading. Since this was intended as an intraday trade, it is imperative to try to close out the 'wrong' trade and not hold overnight. THuman nature of not wanting to admit wrong is folly in trading leveraged financial instruments like futures. Don't let day trades turn into overnight position trades...
Monday, June 25, 2007
20070625 1715. FKLI in downtrend. But there was only one setup for the break out of consolidation trade. Comes at the end of the day when 1377.5 traded, triggering a short for a quick move to 1368.5. The only problem was this move was caused by 1 market order. FKLI is an illiquid market with few participants, despite the 10,000+ contract traded today. This underlies the need for the DMA to put more market participants to add depth and liquidity. If Bursamalaysia can use the CMDF to fund the Investor Relations Association (which the errant directors of listed entities may see as legitimising the books cooking in public companies, since "we are members of the IR Association"), why not use the CMDF to fund this very important project DMA to add depth to this market and the equities market in the future? Who knows what the hierarchy at Bursamalaysia is thinking?
Wednesday, June 20, 2007
20070619 AMMB announced a RM3.70 per share privatisatin of AIGB. So our laggard stock pick of 207 is prematur0ely matured. In this day and age of cheap financing, so called value investing may sometimes be torpedoed by the big boys coming in and taking the 'value' stocks private. As such, the claims of value investing gurus may not hold true these days.
Tuesday, June 19, 2007
Friday, June 15, 2007
20070615 1103. The JADE CPO futures after 1 hour of 'trading' shows jilo volume. They launch the contract without liquidity providers, like Bursamalaysia which has a valuable asset, its Local Participants, who make the market for the CPO futures. Bursa should cherish and maintain this valuable resource to maintain their market position. JADE think they can launch contracts in a vacuum, without Locals, the rebates and scratch trade concessions. At this stage, how they rue their decision.
Thursday, June 14, 2007
20070614 FKLI traded as high as 1358.5 this morning, a big gap in response to Dow rally >180 pts. This quote is poignant on how the market is behaving and is a good warning of the impending moves ahead:
"This is a classic demonstration of the market's continuing denial of risk," said Robert Brown, chief investment officer at Genworth Financial Asset Management, contending that while the economic news is generally favorable, investors aren't pricing in adequate amounts of risk. "It wants to ignore the negative news and focus solely on the positive."
from Yahoo Finance.
Tuesday, June 12, 2007
Saturday, June 09, 2007
Megan, Tansmile, corporate governance, regulators
First Transmile, now Megan Med, who is next? Crooks abound in the corporate world in malaysia, or just isolated incidents... SC or whichever regulator need to invoke the "RM1 m fine and/or 10 years jail" on individuals responsible, not just do 'special audit' then sweep under the carpet.
The era of the ETF (Exchange Trading Fund) for equities is upon us. The first one will be the FBM30 (FTSE Bursamalaysia 30 index) to be managed by Aminvestment. Few comments are in order here:
- This should be good for the market, provided the local institutions and retail embrace the product and change the mindset from gambling on tips and rumours or insider trading.
- FBM30 futures should be launched side by side. This is a logical extension, as the fund manager will be the natural hedgers.
- The manager should learn from Barclays on how to make the market. This malyasian institution is terribly deficient in this area. Just look at the FKLI KL Composite Index Futures, the biggest local institutions are not in the market. Don't know why, maybe they are scared of beng wrong!
Friday, June 08, 2007
Wednesday, June 06, 2007
Currency as hedge for inevitable crash
There has been multiple euphoric episodes in equities that inevitably have led from boom to bust cycles, and when the downdraft comes, it is often difficult to find willing buyers for equities to get out. Dr Klaus Wellerschoff, Chief Economist of UBS Wealth Management recently went on an Asian tour and pointed out this interesting chart EUR/JPY cross currency rate versus Purchasing Power Parity of the Euro v Yen. There is a tendency of FX rates to revert to the mean of the PPP and overshoot to the other side after an extension. When and if world equities fall or correct, shorting the EURJPY will provide a 'hedge' for investors, is the argument.
JADE: How the scheme to make money failed
20070606 There has been a lot of hype by market participants on how JADE Crude Palm Oil futures will take off, take liquidity out of Bursa cPO futures contract, how their ecbot platform has 20000 terminals worldwide, they got clout of SGX/CBOT behind them etc etc. Right now this morning on the first day of launch of the USD CPO contract the volume traded is 70. 70? Pitiful.....
Why did they not take off? They lack people.... Specifically they lack a healthy population of locals to act as liquidity providers. JADE did try to woo the Bursa locals, but hey no scratch trade providions who wants to go? That is why Bursamalaysia has the upperhand because they have a valuable intangible asset: the Locals. Now that Bursamalaysia even waived the RM20,000 membership entrance fee and maintain the rebates and scratch trades providion, Bursa should be highly commended for their foresight and vision. Without people JADE contracts won't take off...
The next question is the foolhardiness to create another exchange JADE. Why not just launch contracts under the SGX brand? The answer is the boffins in CBOT and SGX thought they could creak and skim more profits from another vehicle, by selling servers, computers (front end), software etc. Bursa take heed..... make your money from clearing and trading fee.....not by charging arm and leg for servers and ocmputers.... DMA, go for FIX lah, don't start with stupid MNTP so you can sell each broker a couple of servers for RM100000.....
Tuesday, June 05, 2007
20070604 The inevitable CRASH has come in the China stock markets. T he world has been anticipating this China stock market plunge, only the gamblers in China's two stock exchanges Shenzen and Shanghai were blinded by greed, one of the two enemies traders face in the markets. Now the punters get to know 'fear' the second enemy.
Monday, June 04, 2007
20070604 1230. This was an article in the Business Times online (4 June 2007), on the good corporate earnings reported thus far and how the 'outlook' was bright and rosy. With the cooking of the books of Transmile Bhd recently, we as investors have to ask the questions.
- Do we believe the unbelievably good profits?
- Was there any cooking of the books.
- and the bigger question: Do we trust the numbers?
Friday, June 01, 2007
"There is the plain fool who does the wrong thing at all times anywhere, but there is the Wall Street fool who thinks he must trade all the time."J Livermore
THE END OF AN ERA
From Dragons and Bulls by Stanley Kroll
Intro and Foreword
The Importance of an Investment Strategy
5 The Art of War, by Sun Tau (circa 506 BC) and The Art of Trading Success (circa AD 1994)
That's the way you want to bet/a>
Long-term v Short term trading
Technicals v Fundamentals
Perception v Reality
Part 1: Winners and Losers
Part 2: Winners and Losers
Sun Tzu: The Art of War
Those who tell don't know, those who know don't tell
Why there is no such thing as a "bad market"
The Secret to Trading Success
The Experts, do they know better?
Risk control and money management
The 'good bets' business by Larry Hite
Don't lose your shirt
Ed Sykota's secret trend trading system