What is this theoretical price? Who decides what the theoretical price is?

wow... good question.....

The PDF file inside (the bursa website) already got the details explanation.

Basically, it will look for the best price which bulk or most transaction can be taken place.

too complicated for me

So, during the last 10 minutes, if I queue for selling at 1.00, but the majority of the transactions take place at 0.90, then my shares will be sold at 0.90 also? I don't like this. I have no control over the price I sell or buy.

As far as I knew and understand on the new system.

No. It will not be matched.
The last 10 minutes, all transaction will only be done at the Theorectical closing price, which being determined by buy/sell order that key into or received by system.
It is same with opening price.

That's the thing, I don't understand how to determine the Theoretical price.
How does bursa determine the Theoretical price?
Is the Theoretical price visible at all during the closing stages?
Does this mean during the closing stages, the Theoretical price will not jump? Will the counter close at the Theoretical price?

So, in Zelan's case like yesterday, last 10 minutes shoot up duno how many cents.
If this new systems in place... then there won't be a suddenly surge in price during the last 10 minutes?
If Theoretical Price is RM0.82, Then those sellers at RM0.87 will not be able to sell even if buyer keys in buy RM0.88?

This post has been edited by simplesmile: Nov 29 2008, 05:30 PM

I believe there's a formula for that, need to find out from those dusty rule books... but anyway if ur interested to see how theoretical price works try looking at Futures Trading. They have pre-auction and pre-closing prices.

The pro of Theoretical prices... Pre auction/preclosing
Is kind of obvious to promote stabil market price, u dont want price sky rocketin too fast hittin during market open and catch everyone pants down and before closing time, some joker unloads killing everyone else. than at last 1 sec buyin everythin bak cheaply.

eliminates manipulation..

Con..

In theory at least there is no manipulation but in practice is kind of a different story...
Brokers (i shall not name who) normally with high clients like say the top 10 biggest banks in the world. they can place 5 m shares sell at X price than pull it out, and shove in another price at Y price lower than X... the whole process continues on... this method is to artifically depress the share price to the price u want.

Say X company now trading at Rm 6.. u feel that the price should be around Rm 5 ...
if u have deep enough pockets u can basically manipulate the shares to your advantage.

That said, u have other players in the market tat might run ur plans... they see u sell 5m, they might buy 5m so a tag of war ensue... but doesnt mean they can't pakat?

this r some brief tips n tricks to bend the rules...

unlikely small players like us will make any dent... so more disav to small players.

The Theorectical open and closing price work like this, (simple illutration)

The system has all the orders and total it up. Let say abc stock

buy order at
1.00 got 100,000 lots
0.99 got 120,000 lots
0.98 got 20,000 lots
0.97 got 50,000 lots

While sell order at
1.00 got 10,000 lots
0.99 got 50,000 lots
0.98, got 10,00 lots
0.97 got 30,000 lots

So the theorectical price will be set at 0.99, whereby the most possible transaction that can be carried out ie 50,000.

I think the New System would get back fire in time to come.

First, you are presumed to know, and there is a fact that not many people know what is exactly going on.

Then it could go against the principle of "Willing Buy and Willing Sell"

And in a depressed market and in the absence of FF, why the worry that people may push up the prices ?

And theorectical closing prices could be based on the weighted average of actual transactions matched in the last half an hour according to willing buy and sell principle.

It should not be matched in accordance with theoretical prices which is not real in the first place.

Less sales revenues generated for Bursa, as people would try to understand first.

Correct me if I am wrong.

This post has been edited by SKY 1809: Nov 29 2008, 08:41 PM

So...will the buyers queuing 100,000 lots @ 1.00 get matched first, or the buyers queuing 120,000 lots @ 0.99 get matched first?
If the buyers queuing at @1.00 get matched first, will they pay 1.00 or 0.99?

So...will the sellers queuing 30,000 lots @ 0.97 get matched first, or the sellers queuing 50,000 lots @ 0.99 get matched first?
If the sellers queuing at @0.97 get matched first, will they receive 0.97 or 0.99

sorry noob question what is this new system all about? all trading system going to use this?

Yes. It's from Bursa Malaysia.

if im using m2u .. do i need to upgrade the new cab file? or current version is sufficient

You cannot access to the NEW platform, then you need to upgrade that. I think you need to upgrade the JRE too.

not exactly most countries have already deployed such method except My just did it recently...

if ur market is small in terms of value than its only easier to manipulate otherwise its still free for all and "market forces"...

it doesnt get matched, it will only get matched when market opens assuming there is still a willing buyer and seller ready to take at that particular price.

u can still cancel the trade or amend the price, even there is buyer/seller depending on ur position.

The new system will run on 1.4 JRE or latest 1.6?

Few days ago my dealer called and told me about new system on forced selling day T+4.
Although I didn't fully understand the new system.. this is what she said

(for RHBInvest user)
Before this, my dealer give me time until 4.50pm to sell my shares on T+4, sometimes she give me chance until 4.55 if she see I'm already in q almost going to be matched..

But with the new system, at 4.45pm system will calculate the closing price...
the closing price can be at buyer side or seller side...
within the last 10 mins, u can't enter other price beside the closing price... this is to buy it is?
if there is no buyer... ur q may stuck there, so there is a possibility u couldn't get matched on ur T+4 day.
Does this means I can't even throw to sell into buyer q?

Therefore, RHBInvest set by 4.30pm u must sell the shares for T+4, if not ur dealer will do it for you.
This is to avoid getting stuck at last mins.


This post has been edited by tsarena: Nov 30 2008, 12:14 AM

Price for the last 10 minutes of trading is fixed. No matter how much want to sell or buy, the price will be fixed.

The way the price is fixed depends on the time-frame of 5 minutes before the last 10 minutes, where the theoretical Price is calculated continuously until the last 10 minute starts.

From then on, the buy and sell prices will be fixed and no amount of changes of buyers or sellers can change it.

It is trade as usual, not much different in term of retailers side in normal hour trade, except the opening and closing minites only which only one price will be transacted.
If there is no order can be matched by the system, the last done price in normal hour trade will still be used as closng price. This particular normal happens on those low liquidity stock

Don't need to worry much, not much difference that people will notice except for opening and closing. But it will be significant different on dealers and Bursa side.
Others developed countries already use matching system long time ago.

Need JRE 1.6 and above.

Just want to add something here so people won't miss the discussion in the stock market thread.


The introduction of the Theoretical Closing Price (TCP) in the last 10 minutes of trading for both sessions of the day might confused some investors and traders. But it's quite simple if you ignore all the jargons. Not to mention the introduction of TOP or theoretical opening price.

Basically not much changed in the way you do your trading.

You set up a buy order at a price you want, if someone is willing to sell to you, it gets matched and the transaction is done.

Same with Sell orders, you set up a Sell order at the price you want, if someone is willing to buy from you, it gets matched.

You can set up and change buy and sell orders anytime during trading sessions can cancel anytime as long as it is not yet matched. So this is the same like last time, no changes here.

Trading time is still 9am to 12:30 pm for morning session and 2:30pm to 5pm for afternoon sessions. Nothing changed for trading time.

Pre-opening time has changed though, this is when the market is not opened yet but you can start setting up your orders in Buy/Sell queues, moifying and canceling . Pre-opening is now 30 minutes earlier compared to 15 minutes before I think.


What is Theoretical Opening Price (TOP) ?

TOP is just a fancy word they use to determine what is the opening price for every session. Now a lot of people including me used to think that today's opening price for a counter should be yesterday's closing price. That's actually not true. Opening price has always depended on the queues of both Buy/Sell orders.

Yesterday's closing price is normally seen as a Reference Price or Ref. Price, and does not affect today's opening price other than to give people some sense how the counter was valued in the last session. People who read candle stick charts will notice this often where opening prices are often not the same level as previous closing prices.

Basically, TOP is the price determined by a automatic calculation of the Pre-Opening queues of Buy/Sell orders. The prices where the most volume will be done when the market opens will be the Theoretical Opening Price or TOP.

To be honest, TOP is not important because if you watch the stock market often, opening price has no bearing how the counter will move. But it does show how a LOT of people feel (before market opens) is the right price for a particular counter.



What is Theoretical Closing Price (TCP) ?

Now this is more important of the 2 new acronyms. Basically TCP is the price you will Buy or Sell in the last 10 minutes of each session. TCPs are determined by the 5 minutes prior to the last 10 minutes of trading.

Example:

Morning session trade is 9am to 12:30pm.

Last 10 minutes of trade is 12:20 to 12:30pm

TCP is determined or calculated from 12:15 to 12:20pm or 5 minutes prior to the last 10 minutes.

During this 5 minutes, NO transactions are done. But you can still set up orders, modify or cancel them as you deem fit.

During this 5 minutes, a tug of war is happening between buyers and sellers of a particular counter which you can watch LIVE like football.

As more sellers and buyers set up queues, the TCP is calculated continuously for 5 minutes.

The price where the MOST transactions can be possibly matched at the very last second of 12:19pm for that counter, will be the TCP from 12:20pm onwards.

The moment the clock strikes 12:20pm, trading is resumed and transactions are done, BUT only at the Theoretical Closing Price or TCP.

If you want to Buy/Sell during the last 10 minutes of the session, you can only Buy/Sell at the fixed TCP.

TCP will lasts until the session ends. A new TCP will be calculated for the next session a the same time which is 5 minutes prior to the last 10 minutes of trading.



Important Points

During TCP calculations, NO transactions are done. For 5 minutes, Buy/Sell queue orders will blink and rise and fall but NONE will be matched and transacted.

There is NO restriction on what you want to queue or cancel during the 5 minutes.

When the TCP is determined, NO other prices are entertained. Whether is cheaper or more expensive, once the TCP is fixed, thats the price you trade.

This post has been edited by skiddtrader: Dec 1 2008, 06:54 PM