According to Dorab Mistry, director of Godrej International, Palm Oil price may climb to RM4,000 by the end of the first half, the highest since 2008, amid slow output and high demand in Indonesia and Malaysia. Mistry, who in September correctly predicted the tropical oil would drop to 2,800 ringgit last month, also added that Futures in Malaysia may advance to 3,300 ringgit a metric ton in January and “gradually” increase to 4,000 ringgit.
Source : Bloomberg
Currently, FCPO is at 3180, with opening price at 3172.
Sunday, 13 November 2011
Thursday, 10 November 2011
FCPO Update
Yesterday, FCPO shot up to 3119, its highest closing value since August 2011, despite opening lower during the morning session at 3003. That's more that 100 points, ie RM5,000 difference. By around 4.00pm, the price kept on rising. It was like when the Gold price kept going up, except with FCPO, it all happened within one day. Today, the FCPO market is still expected to remain positive. So, maybe still more opportunities in the CPO Futures market today. Happy Trading !!;)
Friday, 4 November 2011
More Indicators
Apart from the Indicators that I have mentioned, there are many other types of indicators you can use to help you anticipate future price movements.
Patterns
There are many patterns that can emerge from the graphics of the market information provided in the
chart. The following are the most common patterns :-
1. Trendlines
Trendlines indicate whether the prices are in an upward or downward trend.
- If the latest Support and Resistance level is higher than the previous succession of Support and
Resistance, this is an uptrend. The graphics look a bit like a staircase going up.
- If the latest Support and Resistance level is lower than the previous succession of Support and
Resistance, this is a downtrend and looks a bit like a staircase going down.
2. Reversal Pattern. An uptrend is said to have run its course when the new Support and Resistance
level fails to exceed the previous ones. Similarly, a downtrend is likely to end when the new Support
and Resistance level is higher than the previous ones. A pattern indicating that the downtrend will
reverse into an uptrend or vice versa is known as a Reversal Pattern. The most common Reversal
Patterns are the Head and Shoulder Top or Bottom, the Double Top or Bottom and Island Reversals.
3. Continuation Patterns
Continuation Patterns indicate that the market will continue with its existing pattern, whether uptrend
or downtrend. Some common Continuation Patterns are Triangles, the Flags and Pennants and Gaps.
Candlesticks
The Patterns mentioned earlier actually consists of small candlesticks which are usually either red or green in colour. The Green candlestick is an UP candle, which means the closing price is higher than the opening price. The Red candlestick is a DOWN candle which means the closing price is lower than the opening price. There are many different types of candlesticks as Indicator to price movement. Some of the common types of candlesticks are :-
1. Marubozu - which indicates a continuing pattern ;
2. Doji - which indicates a reversal pattern.
I will not elaborate further on the Candlesticks as these are only useful indicators for experienced or position traders ( to be discussed later). If you are a beginner, using too many Indicators may only confuse you and will not help much in your Buy/Sell decisions. As such, it is advisable to stick to the Moving Averages and Support-Resistance as Indicators.
Patterns
There are many patterns that can emerge from the graphics of the market information provided in the
chart. The following are the most common patterns :-
1. Trendlines
Trendlines indicate whether the prices are in an upward or downward trend.
- If the latest Support and Resistance level is higher than the previous succession of Support and
Resistance, this is an uptrend. The graphics look a bit like a staircase going up.
- If the latest Support and Resistance level is lower than the previous succession of Support and
Resistance, this is a downtrend and looks a bit like a staircase going down.
2. Reversal Pattern. An uptrend is said to have run its course when the new Support and Resistance
level fails to exceed the previous ones. Similarly, a downtrend is likely to end when the new Support
and Resistance level is higher than the previous ones. A pattern indicating that the downtrend will
reverse into an uptrend or vice versa is known as a Reversal Pattern. The most common Reversal
Patterns are the Head and Shoulder Top or Bottom, the Double Top or Bottom and Island Reversals.
3. Continuation Patterns
Continuation Patterns indicate that the market will continue with its existing pattern, whether uptrend
or downtrend. Some common Continuation Patterns are Triangles, the Flags and Pennants and Gaps.
Candlesticks
The Patterns mentioned earlier actually consists of small candlesticks which are usually either red or green in colour. The Green candlestick is an UP candle, which means the closing price is higher than the opening price. The Red candlestick is a DOWN candle which means the closing price is lower than the opening price. There are many different types of candlesticks as Indicator to price movement. Some of the common types of candlesticks are :-
1. Marubozu - which indicates a continuing pattern ;
2. Doji - which indicates a reversal pattern.
I will not elaborate further on the Candlesticks as these are only useful indicators for experienced or position traders ( to be discussed later). If you are a beginner, using too many Indicators may only confuse you and will not help much in your Buy/Sell decisions. As such, it is advisable to stick to the Moving Averages and Support-Resistance as Indicators.
Thursday, 27 October 2011
Technical Analysis
There are many indicators you can use in Technical Analysis to help you anticipate future price movements. Just like Fundamental Analysis, it makes it easier for you to decide whether you should buy or sell by studying the chart itself. Technical Analysis is the study of historical price data in an attempt to forecast future price movements and price trends. It involves a study of the market itself rather than news, datas or rumours (Fundamental Analysis) that affect the market.
You will need to have the charting software in order to study the chart and be able to identify the indicators. You can easily have access to the charting software by opening a trading account with a licensed Broker. The chart will record the market info in graphic form, usually taken at regular intervals - daily, weekly or monthly.
If you are new to the market, you may find it very confusing to figure out which indicators to use, as there are so many different types of indicators. As such, it is advisable to start with the simplest indicators first and see how it works instead of using all the different indicators at once.
One of the most versatile and widely used of all technical indicators is the Moving Average.
Example :-
If the market closed @ 90 sen, 100 sen and 110 sen on 3 successive days, you can construct a 3 day MA by plotting the average closing price of the above 3 prices. As such, the first plotted point would be @ 100 sen.
If the closing price on the 4th day is 120 sen, then the second plotted point would be @ 110 sen, which is the average closing price of the 2nd day (100 sen) , 3rd day (110 sen) and 4th day (120 sen), and so on.
The most commonly used MAs are the 5 day MA and the 20 day MA which you will be able to identify easily from the chart. You will be able to indicate the price movement everytime the 2 MA crosses each other.
The following examples can serve as a useful guide on how the MA is used as a technical indicator :-
Example 1 : 22/9
Fundamental
- FCPO ended sharply lower on Thursday at 3009 amid a broad selloff as investors reacted
to an increasingly gloomy outlook on global growth after US Federal Reserve initiated a
new program of monetary easing. Spillover selling from declines in CBOT [soyoil]
added pressure to FCPO. An improving outlook on production in Malaysia and price
outlooks for vegetable oil markets from an upcoming industry conference in Mumbai
this weekend that market participants expect to be bearish weighed further on prices.
Technical
- FCPO started on its downward trend as MA5 line moved downward to cross the
MA20 line.
FCPO opened at 3040, closed at 3016. Down 24 points (RM600).
You will need to have the charting software in order to study the chart and be able to identify the indicators. You can easily have access to the charting software by opening a trading account with a licensed Broker. The chart will record the market info in graphic form, usually taken at regular intervals - daily, weekly or monthly.
If you are new to the market, you may find it very confusing to figure out which indicators to use, as there are so many different types of indicators. As such, it is advisable to start with the simplest indicators first and see how it works instead of using all the different indicators at once.
One of the most versatile and widely used of all technical indicators is the Moving Average.
Example :-
If the market closed @ 90 sen, 100 sen and 110 sen on 3 successive days, you can construct a 3 day MA by plotting the average closing price of the above 3 prices. As such, the first plotted point would be @ 100 sen.
If the closing price on the 4th day is 120 sen, then the second plotted point would be @ 110 sen, which is the average closing price of the 2nd day (100 sen) , 3rd day (110 sen) and 4th day (120 sen), and so on.
The most commonly used MAs are the 5 day MA and the 20 day MA which you will be able to identify easily from the chart. You will be able to indicate the price movement everytime the 2 MA crosses each other.
The following examples can serve as a useful guide on how the MA is used as a technical indicator :-
Example 1 : 22/9
Fundamental
- FCPO ended sharply lower on Thursday at 3009 amid a broad selloff as investors reacted
to an increasingly gloomy outlook on global growth after US Federal Reserve initiated a
new program of monetary easing. Spillover selling from declines in CBOT [soyoil]
added pressure to FCPO. An improving outlook on production in Malaysia and price
outlooks for vegetable oil markets from an upcoming industry conference in Mumbai
this weekend that market participants expect to be bearish weighed further on prices.
Technical
- FCPO started on its downward trend as MA5 line moved downward to cross the
MA20 line.
FCPO opened at 3040, closed at 3016. Down 24 points (RM600).
Thursday, 20 October 2011
Indicators
When deciding whether to buy or sell, there are many indicators you can look at. Generally, these indicators can be divided into Fundamental Analysis and Technical Analysis.
Fundamental Analysis is the news, datas and information relating to the market. If you are a serious investor or a veteran professional, you will probably require more extensive or detailed information and datas to support your views or decisions. But if you are a beginner, it is sufficient to look at the current news and what's happening in the local and foreign markets.
Dow Jones - This is the best way to start your fundamental analysis in the morning. The reason is US market has just closed when we wake up in the morning here in Malaysia. Therefore, the Malaysian market is likely to react to the Dow Jones first thing in the morning. If the Dow Jones drops, FKLI and FCPO is more likely to drop too. Otherwise, there may be other factors to consider too.
As such, you can proceed to market news on Europe, China, Asia and the local news. You may also look at the US soybean market as this may affect the FCPO price. If the FKLI/FCPO price is not following the global market, there is possibly something happening in the local market that is affecting the FKLI/FCPO price.
The following examples can serve as a useful guide :-
Example 1 : 19/9/2011
Stocks on Bursa Malaysia ended broadly lower on foreign selling following rumours
that Greece might default on its sovereign debt and Italy's credit rating was lowered
Standard & Poor's from A+ to A.
FKLI opened at 1430, closed at 1405.5. Down 24.5 points (RM1225).
Example 2 : 21/9/2011
FKLI closed higher on Wednesday after economic indicators signaled growth in China
is withstanding Europe's debt crisis and faltering US economy.
FKLI opened at 1405 , closed at 1417.5. Up 12.5 points (RM625).
Fundamental Analysis is the news, datas and information relating to the market. If you are a serious investor or a veteran professional, you will probably require more extensive or detailed information and datas to support your views or decisions. But if you are a beginner, it is sufficient to look at the current news and what's happening in the local and foreign markets.
Dow Jones - This is the best way to start your fundamental analysis in the morning. The reason is US market has just closed when we wake up in the morning here in Malaysia. Therefore, the Malaysian market is likely to react to the Dow Jones first thing in the morning. If the Dow Jones drops, FKLI and FCPO is more likely to drop too. Otherwise, there may be other factors to consider too.
As such, you can proceed to market news on Europe, China, Asia and the local news. You may also look at the US soybean market as this may affect the FCPO price. If the FKLI/FCPO price is not following the global market, there is possibly something happening in the local market that is affecting the FKLI/FCPO price.
The following examples can serve as a useful guide :-
Example 1 : 19/9/2011
Stocks on Bursa Malaysia ended broadly lower on foreign selling following rumours
that Greece might default on its sovereign debt and Italy's credit rating was lowered
Standard & Poor's from A+ to A.
FKLI opened at 1430, closed at 1405.5. Down 24.5 points (RM1225).
Example 2 : 21/9/2011
FKLI closed higher on Wednesday after economic indicators signaled growth in China
is withstanding Europe's debt crisis and faltering US economy.
FKLI opened at 1405 , closed at 1417.5. Up 12.5 points (RM625).
Wednesday, 19 October 2011
Support and Resistance
The first thing you need to understand about the market is this :-
1) The price cannot go up forever ; and
2) The price cannot go down forever ;
The reason to this is because there will always be buyers and there will always be sellers. As a result, the market will move in a series of highs (peaks) and lows (troughs). The peaks and troughs are known as Resistance and Support.
When the market is on a downtrend, it will reach its lowest point (support). This is where the buying interest is strong enough to support the selling pressure to halt further decline in prices, at least temporarily. When the market reaches its Support level, the price will go up again until it reaches its highest peak (Resistance) again.
When the market is on an uptrend, it will reach its highest point (resistance). This is where the selling pressure is strong enough to resist the buying interests and therefore halt the upward movement in price for the time being. When the market reaches its Resistance level, the price will go down again until it reaches its lowest level (Support) again.
Due to the volatility of the market, you can have more than one Support and Resistance in a day.
The Support level reverses the downward movement in price to an upward movement and is a good time to buy.
The Resistance level reverses the uptrend to a downtrend and is a good time to sell.
To understand how this works, you can look at the following market update :-
On 19th October 2011, FKLI price opened at 1444 and closed at 1446.5 points. Support is at 1440 and Resistance is at 1449. If you short (sell) at 1449 and long (buy) at 1440, you would have gained 9 points which is RM450 (50 x 9 = 450). However, if you expected the price to go up and opened a long position at 1449, you would have made a loss of RM450.
For this week, the Support level is at around 1430 and the Resistance level is at around 1470. The difference is about RM2000 ie, 40pts x RM50.
1) The price cannot go up forever ; and
2) The price cannot go down forever ;
The reason to this is because there will always be buyers and there will always be sellers. As a result, the market will move in a series of highs (peaks) and lows (troughs). The peaks and troughs are known as Resistance and Support.
When the market is on a downtrend, it will reach its lowest point (support). This is where the buying interest is strong enough to support the selling pressure to halt further decline in prices, at least temporarily. When the market reaches its Support level, the price will go up again until it reaches its highest peak (Resistance) again.
When the market is on an uptrend, it will reach its highest point (resistance). This is where the selling pressure is strong enough to resist the buying interests and therefore halt the upward movement in price for the time being. When the market reaches its Resistance level, the price will go down again until it reaches its lowest level (Support) again.
Due to the volatility of the market, you can have more than one Support and Resistance in a day.
The Support level reverses the downward movement in price to an upward movement and is a good time to buy.
The Resistance level reverses the uptrend to a downtrend and is a good time to sell.
To understand how this works, you can look at the following market update :-
On 19th October 2011, FKLI price opened at 1444 and closed at 1446.5 points. Support is at 1440 and Resistance is at 1449. If you short (sell) at 1449 and long (buy) at 1440, you would have gained 9 points which is RM450 (50 x 9 = 450). However, if you expected the price to go up and opened a long position at 1449, you would have made a loss of RM450.
For this week, the Support level is at around 1430 and the Resistance level is at around 1470. The difference is about RM2000 ie, 40pts x RM50.
Sunday, 16 October 2011
Short Selling
Futures Trading is similar to trading in the stock market except the profit or loss you make is likely to be higher and faster. As such, in order to succeed in Futures Trading, you must first understand how the price moves and keep up with its pace. Another advantage of trading in futures is that you are allowed to short-sell.
When you trade in the stockmarket, there are only 2 scenarios :-
1. You buy stocks - Price goes up - You sell back stocks for a PROFIT.
2. You buy stocks - Price goes down - You sell back stocks for a LOSS.
When you trade in the Futures market, there are 4 scenarios :-
1. You buy Futures contract - Price goes up - You sell back contract for a PROFIT.
2. You buy Futures contract - Price goes down - You sell back contract for a LOSS.
3. You sell Futures contract - Price goes down - You buy back contract for a PROFIT.
4. You sell Futures contract - Price goes up - You buy back contract for a LOSS.
As such, there are more opportunities in the Futures market whether prices are on an uptrend or a downtrend. You just need to understand how the market moves in order to take advantage of the price fluctuations by going long (buy) or short (sell) at the right time.
If you are interested to start trading Futures and learn how to trade at the same time, please contact me to find out how you can open a trading account together with free training (online trading, technical analysis and trading strategies). Find out how you can gain new knowledge and skills, enhance your ability to generate income as well as open up a new career option as a full-time trader just by investing in the futures market.
When you trade in the stockmarket, there are only 2 scenarios :-
1. You buy stocks - Price goes up - You sell back stocks for a PROFIT.
2. You buy stocks - Price goes down - You sell back stocks for a LOSS.
When you trade in the Futures market, there are 4 scenarios :-
1. You buy Futures contract - Price goes up - You sell back contract for a PROFIT.
2. You buy Futures contract - Price goes down - You sell back contract for a LOSS.
3. You sell Futures contract - Price goes down - You buy back contract for a PROFIT.
4. You sell Futures contract - Price goes up - You buy back contract for a LOSS.
As such, there are more opportunities in the Futures market whether prices are on an uptrend or a downtrend. You just need to understand how the market moves in order to take advantage of the price fluctuations by going long (buy) or short (sell) at the right time.
If you are interested to start trading Futures and learn how to trade at the same time, please contact me to find out how you can open a trading account together with free training (online trading, technical analysis and trading strategies). Find out how you can gain new knowledge and skills, enhance your ability to generate income as well as open up a new career option as a full-time trader just by investing in the futures market.
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