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Soultrader

Trading the KOSPI 200 Index Futures

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Here is an introduction to the KOSPI 200 futures contract listed on the KRX. The KOSPI 200 consists of 200 stocks selected from issues traded on the KRX Stock Market.

 

The heavily weighted stocks for this index includes companies like Samsung Electronics (15.59%), The Pohan Iron and Steel Company (7.89%), Kookimin Bank (3.89%), HHI or Hyundai Heavy Industries (3.53%), etc...

 

Here is a snapshot of the contract specifications for the KOSPI 200.

 

attachment.php?attachmentid=6848&stc=1&d=1212375361attachment.php?attachmentid=6871&stc=1&d=1212454339

 

At the current exchange rate, 1 tick would be equal to around $25. So basically one point would be equal to $50. (2 ticks per point)

 

Okay, so enough of the technicals. How does the KOSPI 200 trade? Well for US traders, your hours will begin at 7pm EST to around 1am EST. The above CQG contract spec shows open at 20:00 but this has not been adjusted for daylight savings time so the correct time would be 19:00 EST.

 

A couple of key things to note for this contract. This contract is heavily retail driven. Unlike the Nikkei which is dominated by instutions, the KOSPI is rather light in terms of bid/ask. The movements are similar to the ES and Russell combined. Reversal are common making it one of my favorite setups for this contract. Gaps are not as severe like the Nikkei allowing me to use market profile as my preferred tool to spot S&R levels.

 

VSA traders... this is a contract you might be interested. Tests, lower volume lower lows, etc... are very common patterns. Momentum players.... requires discpline but push through supply volume during a rangebound market or test of low is common.

 

attachment.php?attachmentid=6856&stc=1&d=1212378771

kospisample.png.733b801e493ffdc4fc625701c7a8f88b.png

cspec.png.4cb97bf51f638576b1a7f0ee3bb75248.png

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I also hear that the options on the K200 are the highest volume of any market in the world....Thanks for the summary soultrader, I wasn't aware of the difference of market participants versus the Nik. I believe most USA folks can't trade this market due to CFTC regulation, unless that has changed recently.

 

With kind regards,

MK

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I also hear that the options on the K200 are the highest volume of any market in the world....Thanks for the summary soultrader, I wasn't aware of the difference of market participants versus the Nik. I believe most USA folks can't trade this market due to CFTC regulation, unless that has changed recently.

 

With kind regards,

MK

 

Yes that is correct... the options are the highest volume in the world. Dont really know too much who is trading them as most insitutions in Tokyo do not trade the Korean markets.

 

Btw.... what CFTC regulation prohibits USA traders from trading the KOSPI?

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I'm not sure what the regulation is specifically...they just don't allow it. But don't worry, there is no such restriction to trade the Enron or the Worldcom :) Its all for the protection of the American people I think.

 

With kind regards,

MK

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Hello SoulTrader, MK and Kiwi, I have recently been reading lots of information about trading the Asian Indices, and got to know much from you guys in different forums including this one. I have been trading fx and now want to make better use of the Asian sessions trading the Asian indices. But first of all, I will study the markets and pattterns live via IB for a while, though I got some ideas from you guys that Nikkei225, Kospi200 and SPI200 look good to me. Many thanks and see when I will start trading live.

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Here's what my OEC contact said about the Kospi:

 

Currently the KOSPI is still awaiting approval for US Traders to trade.

 

I do not know the specifics but apparently there are some back office things that need done before US traders can trade this.

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pipal,

 

Don't forget the STW (Taiwan on Singapore Futures). It starts and hour later than Nk & SPI but its a nice mover with good depth that's about half the size of the other two.

 

James, do you have any analysis of market participants on STW? I've not seen one and would be curious to know who I'm trading with on STW.

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pipal,

 

Don't forget the STW (Taiwan on Singapore Futures). It starts and hour later than Nk & SPI but its a nice mover with good depth that's about half the size of the other two.

 

James, do you have any analysis of market participants on STW? I've not seen one and would be curious to know who I'm trading with on STW.

 

Unfortunately I do not. Never really looked at them before but now that you have triggered my interest, let me look into it and report anything I find.

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pipal,

 

Don't forget the STW (Taiwan on Singapore Futures). It starts and hour later than Nk & SPI but its a nice mover with good depth that's about half the size of the other two.

 

James, do you have any analysis of market participants on STW? I've not seen one and would be curious to know who I'm trading with on STW.

 

 

Oops I missed that one. :doh: I remember you are trading STW & SPI. I just subscribe these feed from IB, and they are all free except OSE. So I may just the SGX at this stage.

 

There are a few things I have to learn before I can start trading the indices. For the last couple of weeks, I learn about volume, t&s etc. these things are missing when I trade spot fx. Then I have to learn the markets live with a new platform. :angry: But anyway, you guys have already give some directions to start and helps a lot.:)

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One of the things I like about it James is that its honest in its Volume so if you are thinking Wyckoff or Market Profile you might rather like it.

 

By way of contrast, HSI is totally deceptive with volume and SPI is largely honest but has a habit of starting moves on very low volume (whereas STW usually indicates its intentions with a nice confirming punch). I found the number of N225s to confuse me a little on volume (and have played with adding sgx, n225 and n225m together to try to improve my read).

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Kiwi, I check with IB's commissions that seem to be on the high side. But there seems to be no many other choice in the market. If just looking at the "commissions vs tick value", SGX's N225U (com rt $5.7 vs tick val $24.3), and STW (5.7 vs 10) look better, while SPI200 (9.6 vs 24) and Kospi (9.8 vs 24.7) still look ok. I tend to scalp so commission rate and fees are important to me.

 

Afterall, I must first understand and compare their market structures and volatilities and any other special natures.

 

Re the figures above, please feel free to correct me.

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Your numbers seem reasonable. Unbundled gives you advantages even at the base rate except on Yen denominated futures (where ub is higher than bundled) so choosing requires a choice of instruments as well.

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IB has mentioned public on 'that other forum' that they will be reviewing the commission structure 'shortly' to bring the ¥ products in line for the unbundled commission structure. The public statement was over 2 years ago FWIW.

 

With kind regards,

MK

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A little market analysis on the KOSPI for today taking a look at market profile.

 

Swift rejection at todays highs, a confluence area of yesterdays high and value high pivot. "P" shaped profile from yesterday may hint longs being trapped. (or just short covering yesterday) Value area is shifting lower for today... measure move projection of yesterdays range of 295 puts todays low projection at exacty the same as yesterdays low at 22860. Will not be looking to place any countertrend/reversal until that level.

 

attachment.php?attachmentid=6998&stc=1&d=1213060663

 

Alot of clues in todays price action especially the opening 20 minutes of trading. 4 bars of selling pressure.... no sign of accumulation yet.

 

attachment.php?attachmentid=6999&stc=1&d=1213060810

 

Dont think the lows are yet in place..... markets may end up making lower lows at a later point today. Watching volume, I do get vibes of slight short covering but no sign of accumulation yet.

 

On a side note, I like this contract since i am able to read volume unlike the Nikkei. It is definitely more retail driven with more speculation.

 

Random quote from Thomas Gibson (1923) -

 

"Speculation is truly an unbeatable game, but it is not an unbeatable business."

kospimp.thumb.jpg.d5675464781c14e7f0d5ef7a2a2ff6d5.jpg

kospittf.jpg.780383ad09eb9a52f256f7e2f1b932a2.jpg

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As Soultrades has been so kind to post some live trades I thought I get myself somewhat familiar with the Asian ones :)

 

I pulled up a chart to see the big picture, and was surprised to see that it's very similar to the major US indices. European indices (especially the DAX) followed a somewhat different pattern for topping.

 

attachment.php?attachmentid=7006&stc=1&d=1213081602

 

One of the things I like about it James is that its honest in its Volume so if you are thinking Wyckoff or Market Profile you might rather like it.

 

By way of contrast, HSI is totally deceptive with volume and SPI is largely honest but has a habit of starting moves on very low volume.

 

I was wondering what you guys meant with the volume issues... why is it deceptive? Is it because the liquidity is less than normal on some of the Asian indices but better on the Kospi? Had a look at some of the charts Soultrader posted and the volume seems around 3-5k per 5 minutes, that seems on average rather low?

5aa70e74660cd_kospi.png.39da0ebc9cfc2ae8d71c804885e28f7e.png

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Thanks James for your anyalsis and information. Do you use IB for trading KOSPI? If not, what would you recommend? I have an IB account, but the commission seems to be on the high side so I don't use it often. Of course if communication in English with local brokers cause lots of trouble, IB seems to be the best option I know.

 

I have done a quick research on the Asian markets (KOSPI, STW, SPI200, SGXNK, HSI) for a few days, using IB's live feed. Now I will go further with KOSPI and STW and see how live trading is going.

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Thanks James for your anyalsis and information. Do you use IB for trading KOSPI? If not, what would you recommend? I have an IB account, but the commission seems to be on the high side so I don't use it often. Of course if communication in English with local brokers cause lots of trouble, IB seems to be the best option I know.

 

I have done a quick research on the Asian markets (KOSPI, STW, SPI200, SGXNK, HSI) for a few days, using IB's live feed. Now I will go further with KOSPI and STW and see how live trading is going.

 

Hi pipal,

 

Not many brokers offer KOSPI. IB is probably the easiest but you might want to look into FCM's that cater retail trading. I know a few here in Tokyo that provide this. From your profile, I understand you are based in HK? Samsung Securities might be something to look into as they have a branch in HK. Below are their details:

 

Address: Suite 1610-1613, Jardine House 1 Connaught Place,

Central Hong Kong, Hong kong

 

Phone: 852-211-7535

Fax: 852-2114-0290

 

I looked into other brokerage firms like Daewoo Securities and GoodMorning Shinhan Securities but could never quite communicate with them. I know of only one local broker here in Tokyo that provide a variety of Asian products (no english though)... commissions are no different from IB at approximately $7 RT.

 

Oh btw.. how about MF Global?

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I know of only one local broker here in Tokyo that provide a variety of Asian products (no english though)... commissions are no different from IB at approximately $7 RT.

 

Hi James,

 

Thanks a lot for your details. If you are referring $7 RT for KOSPI this is still better as IB is around $10 RT. $3 can be a difference for daytraders like me.

 

I am based in Hong Kong, and know about MF Global but I guess they are no cheaper than IB. I talked to them before for FX and had a feeling that they are not so retail client oriented. On the other hand, MF Global Taiwan is really more retail oriented as seen from its website, but it seems that they only allow local taiwanese to open account.

 

I have checked with the Korean Giant firms you mentioned. What I can get from their website is only their company information bah bah bah, not so any information about brokage services, account opening etc. I can guess what sort of services and trouble I may have as a foreign client even if I can open an account with them.

 

Meanwhile I may still trade with IB and I also check with some US FCMs that offer Asian Markets via MF Global, RCG etc. It seems that they are more ready to cater online trader from foreign countries.

 

Best regards

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Your numbers seem reasonable. Unbundled gives you advantages even at the base rate except on Yen denominated futures (where ub is higher than bundled) so choosing requires a choice of instruments as well.

 

Thanks Kiwi, I have checked with IB for the unbundled. All are better except SGXNK on my list. But they don't offer unbundled for KOSPI which costs about $10 RT. :confused: And they warn me if I opt for unbundled, that would apply to all futures contracts.

 

Anyway the fees look better before there is a better option.

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I've tried MF Global before for Asian markets...they didn't feel like replying to my email queries :(

 

With kind regards,

MK

 

Hi MK

 

And their website look very institutional like, and don't bother to cater retail clients. I guess they want retail traders to deal with MF's introducing brokers instead of dealing with them directly. Just my 2 cents.

 

Best regards,

pipal

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Reversals all across Asia today.

 

That's interesting, I'm just typing up a post about potential selling climax in the US late last night.

That KOSPI chart is more or less the action you would expect to see after that...

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I use metatrader to look at charts. I mainly look at kospi and hangseng. Just wanted to mention that. I don't know how effective that is having in mind I am paper trading... anyways I am here to learn, I like the big volume, it looks more interesting than other markets, thanks!

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