Advantages Of Trading Futures
Instead of invest in stock market, maybe we can try to look into trading futures. Here are few advantages of trading futures.
1.Leverage
FKLI provide leverage for investors. Performance of FKLI is pegged to the 30 component stocks of KLCI. Investor can buy 30 component stocks of KLCI by only laying down RM5000 initial margin. Imagine the amount you need to fold out to buy all the 30 stocks listed in KLCI. Therefore, FKLI provide great leverage for investor.
2.No Valuation Needed
There is no complicated valuation needed for FKLI. Investor do not need to count on ROE, NTA, EPS and etc. However, these need to be done on stock investment.
3.Flexible
Futures product can trade in all season either bull market or bear market. Investor can long the FKLI if market going well and short the index if market going south way. This is the advantages of futures compare to stock.
4.Higher Return
Futures product provides high return for investor. This exactly suite the appetite of high risk investor or speculator. Investor can easily acquire 10-15% of return in a day as compare to equity which might need a few months to a few years.
5.Lower transaction cost
Futures product demand a lower transaction cost compare to equivalent amount of stock transaction. Lower transaction cost and high return give investor handsome profit.
Trust me, there is more disadvantages rather then advantages investing in futures. The risk is like many times higher if compared to buying stocks as there isn’t any data that we can rely upon in making our decision. It is more like gambling or playing Banker Player in casino!
Just my 2 cents! ^^
[Reply]
Yes, the risk is much higher but on the same time it give you higher return. I like FCPO instead of FKLI. There is always a trend in FCPO. If you can catch it, you will make it.
If FKLI, just as you said, banker player game!
The most important is manage your risk. You do it well, you will see prospect in trading futures.
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