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1 INSTRUMENTS OR COMMODITIES TRADEDThe commodities that we traded are Futures Crude Palm Oil (FCPO), Futures Kuala Lumpur Index (FKLI) and Futures Gold (FGLD). We choose these contracts because, FCPO and FKLI is a famous contracts in Bursa Malaysia Derivative that always traded by the trader and inv...

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ASSINGMENT 3 - CASE STUDY REPORT

1.0 INSTRUMENTS OR COMMODITIES TRADED The commodities that we traded are Futures Crude Palm Oil (FCPO), Futures Kuala Lumpur Index (FKLI) and Futures Gold (FGLD). We choose these contracts because, FCPO and FKLI is a famous contracts in Bursa Malaysia Derivative that always traded by the trader and investor. So, the price can move faster that other contract because of the supply and demand create by the trader. Besides that, we also choose Futures Gold to trade because the Gold Spot price now in bullish mode. So, we can take opportunity to buy or long position.

2.0 WHO WILL DO WHAT IN YOUR GROUP? FOR INSTANCE, WHO WILL DO RESEARCH READINGS, ANALYSE PRICES? For reading and analyses prices of the commodity, we work together in looking for a good price to entry and what future contract to trade. Firstly, we selected a few contracts that have a good price or opportunity to move. After that, we set the trading plan such as entry price, target point and cut loss point. We also calculate risk and reward ratio before make a position. Below is example of trading plan that we set up. Name of Contract : FKLI December 2019 Position : Buy or Long Position Current Price : RM1585.50 Entry Price : RM1585.50 Target Price : RM1650.00 Cut Loss Price : RM1580.00 Risk : Loss RM20.00 Reward : Profit RM64.50 Risk Reward Ratio : Around 1:3

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ASSINGMENT 3 - CASE STUDY REPORT

3.0 THE FACTORS WHICH DETERMINE THE PRICE FOR EACH FINANCIAL INSTRUMENT OR COMMODITY 3.1 Volume Traded of the Contract Volume of trade is the total quantity of shares or contracts traded for a specified security. It can be measured on any type of security traded during a trading day. Volume of trade or trade volume is measured on stocks, bonds, options contracts, futures contracts and all types of commodities. If volume increases, the price is more easily to move up or move down. Normally, the investor or trader will see the volume of the contract first before trade. 3.2 Fundamental of the contracts or commodity Fundamental analysis is the process of looking at a business at the most basic or fundamental financial level. This type of analysis examines the key ratios of a business to determine its financial health. Fundamental analysis can also give you an idea of the value of what a company's stock should be. It takes several factors into account, including revenue, asset management, and the production of a business as well as interest rate. For example, In future trading, we study the fundamental of Crude Palm Oil to forecast the price of Futures Contract. 3.3 Spot price of The Commodity The spot price is the current price in the marketplace at which a given asset such as a security, commodity, or currency can be bought or sold for immediate delivery. While spot prices are specific to both time and place, in a global economy the spot price of most securities or commodities tends to be fairly uniform worldwide when accounting for exchange rates. So, in this situation, if Spot prices of Crude Palm Oil increase, the price of Futures Contract also will be increase.

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ASSINGMENT 3 - CASE STUDY REPORT

4.0 OVERALL TRADING PERFORMANCE IN TERMS OF PROFIT AND LOSS AND PERCENTAGE OF CHANGE

NAME

TOTAL CLOSE

INITIAL TRADING VALUE (RM)

TOTAL TRADING VALUE (RM)

PROFIT/LOSS (RM)

PCT(%)

Ahmed Khalif Bin Abdul

70

1,000,000.00

1,008,200.00

8,200.00

0.82

Syafiq

6

1,000,000.00

1,010,025.00

10,025.00

1.00

Mohd Johan bin Mohd

47

1,000,000,00

1,000,425.00

425.00

0.04

161

1,000,000.00

999,200.00

-800.00

-0.08

NO

1.

Ghani 2.

Mohd

Ammar

Bin Azmi 3.

Nasir 4.

Mohamad

Rasidi

bin

Abdoll Kudus

5. MOST PROFITABLE AND MOST UNPROFITABLE TRADES AND THE REASON USING TECHNICAL AND FUNDAMENTAL ANALYSIS 5.1 Most Profitable Trades Based on report, the most profitable trade is Long Position of December Futures Crude Palm Oil Contract 2019 (FCPO 2019) trade by Ammar Syafiq on 11 October 2019. As we can see in report, entry price / initial price is at RM2216.00 and closed price is at RM2524.00. So, in this trading, the profit is 308 points and equal to RM7700.00 (308 x 25). We used the technical analysis in projection the Crude Palm oil Price. The reason is Crude Palm Oil price breakout in October 2019, so it is opportunity to long or buy position to make more profit. The chart below show that CPO price was breakout in October and continue increase. So, the investor or trader can take this opportunity to long CPO contract.

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ASSINGMENT 3 - CASE STUDY REPORT

CHART 1 : EXAMPLE OF RESISTANCE BREAKOUT

The second reason that we used is Fundamental Analysis. As a trader, we need to know the nerws that can affect the CPO Price. For example, refer to the news below, we can conclude that the price will continue increase. So, we decide to hold the position till make more profit. https://www.thesundaily.my/business/cpo-price-uptrend-continues-in-october-CN1593217 KUALA LUMPUR: Concerns about supply shortfalls and higher export scenario sentiment saw Malaysia’s crude palm oil (CPO) continue its uptrend mode after recording its first major recovery in October, surpassing the 2018 level for the first time. Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said October’s CPO futures jumped 15% or RM318 and retained the healthy gains in November, rising by RM111 or 4.51% to a new high on Friday. At Friday’s close, CPO futures January 2020 ended at a 22-month high of RM2,573 per tonne on last-minute buying interest, while in the physical market, November South was RM20 better at RM2,480 per tonne. Quoting the Malaysian Palm Oil Association, Sathia said October production output was up by 1.02% from the previous month, which was a lower pace compared to the 13% and 6% rise in October 2017 and October 2018, respectively.

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ASSINGMENT 3 - CASE STUDY REPORT

On average, October production rose by 1.61% to 1.871 million tonnes. The five-year average of October production is at 1.916 million tonnes. He said the October output data is critical to determine the full year estimate after a lacklustre production in August and September. “August, September and October are the three peak production months in Malaysia, making up 35% of the annual output,” he told Bernama. Sathia said the actual Malaysian Palm Oil Board (MPOB) data, today, will further reinforce the market fundamental. MPOB previously forecast CPO production will start to decline from November until December, following the normal downward production trend. The output increased by 1.2% to 1.8 million tonnes in September and 4.64% to 1.82 million tonnes in October. The board also forecast that the Malaysian palm oil production to rise to 20.3 million tonnes this year against 19.5 million tonnes last year due to the expected good weather. – Bernama

5.2 Most Unprofitable Trades Based on report, the most unprofitable trade is Long Position of February Futures Crude Palm Oil Contract 2020 (FCPO 2019) trade by Muhamad Rasidi on 25 October 2019. Entry price / initial price are at RM2484.00 and closed price is at RM2430.00. So, in this trading, the loss is 54 points and equal to RM1350.00 (54 x 25). So, as we can see here, the loss happened because, he do not hold the position after short term loss or unrealized loss. We know that the Crude Palm Oil price in bullish start from October, if he hold the position, he can avoid his loss and can make profit.

6.0 STRENGTHS AND WEAKNESSES OF OUR TRADING STRATEGIES 5

ASSINGMENT 3 - CASE STUDY REPORT

The strengths of this trading strategy are trade with using technical analysis. Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities in price trends and patterns seen on charts. Technical analysts believe past trading activity and price changes of a security can be valuable indicators of the security's future price movements. Technical Analysis (TA) is used by stock traders to pinpoint entry and exit price for optimum profit. For example, in this we focus to make long position when the price is breakout. Buy on breakout is a basic technique in a stock market or future that that always used by traders. We can see the price breakout the resistance when using the technical analysis. Besides that, we also used fundamental analysis as our strategy. Fundamental analysis (FA) is a method of measuring a security's intrinsic value by examining related economic and financial factors. Fundamental analysts study anything that can affect the security's value, from macroeconomic factors such as the state of the economy and industry conditions to microeconomic factors like the effectiveness of the company's management or country’s management. Using fundamental data, we can make forecasting about the direction the market whether uptrend or downtrend.

7.0 CONCLUSION OF OUR FUTURES TRADING GAME As a conclusion, based on trading report, we can make profit in futures trading if we have good strategies in trading. To be a successful trader or investor in future market trading, we need to understand the importance of the Technical Analysis and Fundamental Analysis and know how to use it. Overall, three of our members make profit and 1 loss in our futures trading game.

8. LOG OF OUR TRADES - Refer attachments

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