Return for Futures and Derivatives estimate 30% for the yr 06 and 07. <EDITED

Example
Take FKLI (Bechmark KLCI)
0.5 tick/point = Rm 25
1 tick = Rm 50

If the FKLI were to surge 10 points that would be Rm 500 gain and vice versa.

Not suprisingly if the market were to go against you, you can lose more than you have invested in the market.

It all depends on the volatility of the market.

See a Future broker representative near you for in-dept details.

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Added on January 2, 2008, 2:16 amTrading in Futures and Derivatives...

General Requirement
1. 18yrs old at the date of agreement
2. IC + 3 months Pay Slip/ Be Form/ Form J/ 3 months Bank Statement
3. A Future Broker Representaive
4. Rm 10 Stamping Fee

Account Opened?
1. Initial Margin is Rm 5000 (i.e. deposit)
2. Margin Call is T+1 (instead of being T+3 like securities)
3. All transactions are settled at end day by brokerage
4. Margin call is at 8:45am, payment must be made before 12pm.
5. Instructions/orders/Trades can be placed Online or by Phone.
6. End day you will receive a daily activity statement and end month you will also receive a monthly activity statement

[attachmentid=384840][attachmentid=384841]

I took the liberty to attach the initial margin rates effective from 22nd Jan 08 to 25th Jan 08
He does have a point, on the other hand of course taking big risk also have big returns otherwise we wont be trading into the future. It could be 10K profit as well right?

by the way if the market drops more than 20% it will automatically trigger a circuit breaker meaning that the entire market will be suspended for that particular day.

huhuh.. those shortin klci must b laughin rite now...

haizz... so sad... not manage to open futures acc. in time 

Ok what i meant was:

1. Say in your bank now you only have Rm 1

2. We require 3 months bank statement

3. So you produce 3 months bank statement

4. We open you account (suprise!)

5. Account opened for futures trading

Say you want to start going active and trade futures:

1. Refer to the initial margin table

2. FKLI initial margin is Rm 5,000

3. Deposit Rm 5K with Futures Broker

4. Start Trading Futures.

Like me I am also here to share my knowledge with everyone but from a future broker's officer point of view, if i am able to I will invite a trader to speak on forum.

Many ppl have a view that the futures market is offlimits to individuals and only to financial institutions but this mentality and concept is wrong.

Further, the other mistaken perception is people tend to lose interest because of the procedure attached in account opening. I want to clarify this point so that ppl who indeed have knowledge in the futures market, know how to proceed without being bogged down by all this worries.

Our company posses one of the toughest conditions on account opening, I can help you navigate through the minefields of red-tape and also abit of tips and tricks on commission rates 

Futures is a very unknown and vague territory for many including me, although i do suggest you open an account and make use of the Future Broker Electronic Trading Facility (something like HLEBroking) to monitor the Futures Market. There are no strings attached, certain brokerages offer this service for free.

Spread?

Spread (aka short or long roll-over) normally individuals/institutions will roll their (open) position to the next following month when products (i.e. FKLI) near their expiration month.
Actual Trading Practice

Explanations to why Individuals don't use spread much...
This happens always 3 days to 1 week before expiration, individuals usually will avoid this month because its highly volatile. There is no sufficient individuals aka speculators in the market to have a level playing field against institutionals who can trade upwards of 100 contracts to 1000 contracts. So when they rollover this contract everyone will feel the ripples of their movement.

I have seen individuals used spread but the return takes time and patience and alot of monitoring of forward months, in futures they only want to do it fast and furious in and out without holding any position for too long. Not a matter of maturity on the contrary.

It depends on individual, if one has some good history of financial creditibility, it doesn't require much information or red tapes, just sign up the opening account application form and paid Rm10 for stamp duty then viola, next day can trade already as my case    when I open the futures trading account.

Locally, using spread to gain is difficult because relatively low liquidity or volume, most concentrate on spot month, others forward month contract bid and ask can be too far sometimes and with low volume only. You need 2 way of trade to gain through the spread.

In US, it is much easier to do and when opportunities come one can always use arbitrage for some small and quick gain.

Eg. if a portfolio manager is holding of 100 KLCI component stocks with KLCI index at 1350, while FKLI is trading at 1310, the managers can dispose the 100 stocks then buying the equivalent amount money/value of FKLI at 1310. In this way the manager can straigh away make a profit of 40 points while its holding value still remains unchanged. That's how you do abritage trading and using the spread to make quick and automatical gain. Sadly to say, locally the non-diversified investment tools available here are not presenting this kind of opportunities.

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Added on January 23, 2008, 2:31 pm

Yup, experience sometimes is the ultimate 'teacher'

Just remember to have high discipline when trading and trade until you can afford.