In Defending 1000 Billion Market Capital

Read back the old post, What Is 1000 Billion Meant To Me, in early October on the 30 component stocks of FTSE Bursa Malaysia KLCI or FBM KLCI index in short, readers should be knowing the issue of defending the market capitalization in the last day of year 2014!

At 1740 level, FBM KLCI index is now having just about 1 Billion Ringgit below the 1000 Billion benchmark - 999 Billion Ringgit (the emergency number!).

Remember at 1800 level, we had 1050 Billion Ringgit value of the market capitalization in the 30 component stocks, we (our country) now poorer by 50 Billion ringgit after FBM KLCI drop 60 points to 1740. 

Just imagine how much poorer we (again, our country) are when the FBM KLCI index drops another 60 points? We will be 100 Billion Ringgit poorer based on a basic observation on the above paragraph. 

Therefore, just pray hard that our 30 component stocks do well in their respective businesses and wish that our 1000 Billion benchmark double in coming years! 

Bursa Malaysia Derivatives - 4

Institutional brokerage firm like KAF-Refco brought me in to work at the cpo futures trading desk as the company's floor trader from a typical Chinese physical cum futures brokerage firm called Convest; I was joining KAF-Refco ambitiously in believing they had a complete mathematical system that would probably have made them wildly rich. As I can recall, a well known palm oil analyst cum broker, G.M. Teoh, was also in the trading team, handling millions of ringgits worth of contracts for clients.

Thought they were serious and smarter than everyone else in the market by bringing more professional in full technical advantages on hand signals, the madness had actually turned the cpo futures trading pit into a "madhouse" until there were some floor traders in the forties dared not do trades! Whenever they went near to the pit, they felt they were risking their lives!!! They were so worried to make errors to fill a contract of cpo futures, be it the price or contract month! A kind of phobia in trading and preferably stayed in their own booths. 

Any way, the hoo-ha from KAF-Refco lasted less than one and a half years, I joined the last batch of the new "Locals" in KLCE open out-cry cpo futures trading. Many of whom enrolled were former trading clerks and trading floor employees knew well the risk and reward in trading cpo futures and wished to make their own first gold pots from such a risky trade that easily made or lose thousands in a day for a small trader.

Knowing trading cpo futures was so intoxicating, many never thought of learning how to survive and always forgot the simple theory in trading success like "cut loss fast, let profit run", including me!   

Bursa Malaysia Derivatives - 3

Technology has made a deep impact on futures trading, open out-cry trading on crude palm oil futures trading generated an average much below 2000 contracts a day when I was still a runner in the cpo futures trading pit in KLCE but electronic trading can help generating more than 2000 contracts in just a few seconds in cpo futures trading presently.

I still remember the chaos day that open out-cry cpo futures trading volume hit 5000 contracts when I was a trader in a newly set up futures company called KAF-Refco, we did 3000 contracts that day! Since the trading copy, as mentioned in previous post, had its limitation by not exceeding 20 contracts per copy (under the KLCE rules), just imagine how many copies would have been raised for the 5000 contracts traded that day! We floor traders had to sort out all the trading copies for more than 3 hours after the cpo futures market was closed at 6pm! 

30,000 open positions was basically at the high end in open out-cry trading but electronic trading has the open positions hit 280,000 before coming down to about 180,000 when this post is written.

As we all know that Locals in cpo futures trading are the speculators but also the market makers. In open out-cry trading, they were the pits traders jumping up and down "insanely" in outsiders' eyes who stood at the 5th floor Gallery watching down the big trading floor on all kinds of hand signals and body gestures in a very noisy environment in DayaBumi Complex.

Today, there is no more such a marketplace. Locals sit in cosy rooms finger press on their keyboards to do trades... no longer jumping up and down with hand signals!

Bursa Malaysia Derivatives - 2

The "Locals" or the so called licensed speculators were given seats by the "ex" Bursa Malaysia Derivatives through the purchasing of trading permits or "memberships" at RM10,000 or RM30,000 in the 1990s when the BMD was mainly from the two separated entities, KLCE and KLOFFE. I was a Local in CPO Futures trading and did pay the RM10,000 to start trading with the trading permit after being interviewed and approved by the Board from KLCE.

Just for a record, the KLCE was last located in DayaBumi Complex near Dataran Merdeka before the open-outcry trading system was ended in December 2001. Here is the sample contract form issued by all floor traders in the cpo futures trading pit. It showed the Alpha code of Seller and Buyer while stating all the contract month in the International code format, price and size with time stamped to confirm the trade was done at the particular time. As shown below, the month codes and trading copies with time stamped on 27 Dec 2001:

	MONTH	1	2	3	4	5	6	7	8	9	10	11	12
	CODE	F	G	H	J	K	M	N	Q	U	V	X	Z

KLCE trading contract copies

The yellow copy was the seller's copy and seller must do time stamping once a trade was traded and issued a carbonized trading form that contained total five copies. First original white copy for KLCE, two duplicated yellow copies (for seller's clearing broker and seller) and two duplicated red copies (buyer's clearing broker and buyer).

The "Locals" did enjoy low transaction cost and even zero transaction cost on scratch trades which meant  when they buy and sell price at same price in different transaction in same trading day, they paid zero fee. These scratch trades did save a lot of trading cost especially for locals who active in spread trading while helped increasing the liquidity of the cpo futures market.

A Day In Melbourne - Page 5

Walking around the QVM, the first impression of the market would definitely be Her cleanliness, well organized and well maintained wholesale to retail market as compared to our traditional "wet" and "messy" market in Malaysia.

The most obvious look is they are too "special" and "weird" for Asian country man like me seeing something that never appear in our wholesale to retail market...for example:

Dianne's Delights "home-made dips & pestos"

Hmm...home made dips and pestos? Heard about this? Tomato stuffed olives, home made marinated semi dried tomatoes, buffalo mozzarella fantastic with basil pesto? Those are only a few types that offered by the shop. There are many more different but unique shops in the QVM and also the A Shed A to the  "Z" Shed (not really until "Z" ), trust me, one day visit will never enough! QVM is open 5 days a week only and not Monday to Friday ya!

Take a look at the self-guided tour brochure if you happen to make a visit there, click HERE to read the heritage trail in e-copy pdf format... Site 9 - The Ghost!!! Or, just go to the QVM main website if you wish to know more details.

Dairy Produce, Therry st, QVM.

Bursa Malaysia Derivatives - 1

Bursa Malaysia Derivatives has become one of the international market place on futures trading benchmark in our global economic system especially on the crude palm oil commodity futures trading which was lunched in early 1980s. By doing a Google search on KLCE, MME, COMMEX, KLOFFE, MDEX and BMD, it is believed that readers will be able to find the history and the "evolution" of Bursa Malaysia Derivatives.

However, the Exchange itself and the speculators who help run them remain largely misunderstood, general thinking, they served no useful function other than a gambling pool being specially set up for those tyranny big boys!

In my first thought, this was actually considered to be a meeting place for gamblers - professional gamblers !!! It was especially true when I first stepped in the pit where the open-outcry crude palm oil futures trading floor located in the Dayabumi Complex near Merdeka Square, Kuala Lumpur in mid 1990s.  

The Exchange had since been transformed into a sophisticated electronic trading market place (year 2000) and partially owned by one of the world largest and busiest Exchanges. You may call it a licensed casino, but the Exchange itself is the real free and "regulated" market place where speculators serve a very important function helping the Exchange to be a well-known "licensed casino", making sure every buyer and seller is part of a pair like socks we wear that creates volumes.

With all the sounds, friends and chaotic trading activities I had missed in KLCE in 1990s, I wish there is a time machine that bring me and you back to learn the "hand signals" to make a trade like other speculators did - they were the "Locals". 

They are the speculators with a mindset of high risk high return, make fortunes or end up broke! 

Books And Ideas - 1

"...the book is an extension of the eye..." - Marshall McLuhan.

Going through the kind of business of taking risks, mostly with money, on crude palm oil futures trading in Kuala Lumpur Commodity Exchange (now Bursa Malaysia Derivatives) in the end of 1990s, I did see with my own eye some of my seniors were so successful in trading the commodity futures but there were also traders who failed and bankrupt.

After the commodity futures was migrated to electronic trading, all traders had since been doing in a quiet and "peaceful" environment, and some (including me) felt loss and missed the loud and noisy shouting open-outcry trading pits. This had prompted me to write my first book - Trading Crude Palm Oil Futures at Bursa Malaysia Derivatives - since there were plenty of time in a single room playing solitaire game in my personal computer while monitoring the futures market.

The book was published with ideas of leaving some good memory in printed copy that what open-outcry traders like me did in the hoo-ha super busy trading day when the 1997 Asian Financial crisis hit the commodity futures market (just do a google search on the 1997 Asian Financial crisis and you may know more than I do!). The book had the basic ideas in technical trading that I learned from my senior who was one of the biggest traders in crude palm oil futures trading in early 1990s.

Inside the book, there are three basic technical trend indicators that can be easily constructed using Microsoft Excel or any spreadsheet software in simple formulas (I was actually taught by my "ex-girl friend"!). Remember, "success must have a trading plan" - traders' wisdom.

At page 40 of the book, that is the trading plan that did help me to succeed in trading crude palm oil futures after acquiring the skill of how to use the three technical trend indicators. The table and the technical trend indicators has been part of my trading life that I still have them until today.

In trading success, I still like to advice novice traders: read 100 times a book is better than read 100 books.