1

COMMODITY
TRADING
ACM GOLD MOCK TRADING TERM REPORT



2011
SUBMITTED BY:
HARESH
TALHA
OWAIS


Financial Derivatives Term Report


Table of Contents
Brief Over Of Pakistan Mercantile Exchange ................................................................................................ 3
Commodities Traded ..................................................................................................................................... 4
Portfolio Composition ................................................................................................................................... 4
Daily Trading Activity .................................................................................................................................... 5
Day 1 (Nov 1) ............................................................................................................................................. 5
Day 2 (Nov 2) ............................................................................................................................................. 5
Day 3 (Nov 3) ............................................................................................................................................. 5
Day 4 (Nov 4) ............................................................................................................................................. 5
Day 5 (Nov 7) ............................................................................................................................................. 6
Lessons Learnt: .............................................................................................................................................. 6
ACM Gold ...................................................................................................................................................... 7








Financial Derivatives Term Report




Brief Over Of Pakistan Mercantile Exchange
Pakistan Mercantile Exchange (formerly National Commodity Exchange Limited) is the first
technology driven, web-based, demutualized commodity exchange in Pakistan. It is licensed and
regulated by the Securities and Exchange Commission of Pakistan and has a 100 % Institutional
shareholding.
Pakistan Mercantile Exchange Limited started its operations in May 2007 as a fully electronic
exchange with nationwide reach. PMEX is committed to provide a world-class commodity
futures trading platform for market participants to trade in a wide spectrum of commodity
derivatives, driven by best global practices, professionalism and transparency.
Pakistan Mercantile Exchange is the first Exchange in Pakistan to employ modern risk
management techniques based on Value-at-Risk with a pre-trade risk check in real time. The
Exchange acts as a central counterparty to both buyers and sellers through a novation process
and provide clearing & settlement on a T+0 basis using on-line bank transfer mechanism.
The Membership of Pakistan Mercantile Exchange is open to all. Currently there are more than
300 members registered on the Exchange and the number is growing every month. The members
include brokerage houses, individuals and industry specialists ranging from traders to exporters
and importers and commodity specialists.
Pakistan Mercantile Exchange recently changed its name from National Commodity Exchange
Limited to better reflect its broad mandate and scope of activity to trade all types of futures
contracts.
The Exchange recently increased its timings and now operates 21 hours. The increase in trading
hours is important at this time as the international market is ticking very fast and investors in
Pakistan also get the opportunity to be part of the global activity from a regulated platform
whereby they benefit from the commodity price trends and have the ability to hedge their trades.
Pakistan Mercantile Exchange has an Institutional shareholding and the shareholders include
National Bank of Pakistan, Karachi Stock Exchange, Lahore Stock Exchange, Islamabad Stock
Exchange, Pak Kuwait Investment Company (Pvt.) Limited, and Zarai Taraqiati Bank Ltd.
Financial Derivatives Term Report



Commodities Traded
The main commodities traded on the Exchange have been Gold, Silver and Crude Oil. There
are various contracts in each. Gold has eight contracts namely Gold 1 ounce, Gold 100 ounce,
Gold 1 Tola, Gold 50 Tola, Gold 100 tola, Gold Kilo, Gold 100 gms, and Minigold 10 gms. Tola
gold and minigold are deliverable contracts. Furthermore there are two contracts in Silver 100
ounce and 500 ounce and two contracts in Crude Oil 10 barrels and 100 barrels. The smaller lot
sizes for Silver and Crude Oil were introduced very recently in June 2011.

Portfolio Composition
The mock trading competition allows trading in gold, silver and crude oil futures in December
2011, but the trading was done in Gold futures due to the following reasons:
Gold is regarded as a safer option for the investors especially due to international
financial crisis (Greece and Euro Debt Crisis)
Market expectations and its trend in the futures reflect stability whereas oil reflects
instability due to its demand fluctuations
Initially when trading starts it was observed that predicting the price movement in gold
on a fundamentals basis was easier as compared to predicting the trend in other
commodities, which also proved during the second week of trading.
Instead of adopting diversification strategy by investing in different commodities in order
to hedge the risk, trading in one particular commodity (Gold) and closely following its
fundamental and technical analysis is considered to be a better option since it would be
more beneficial to fully gauge the market principles of a single commodity than to
understand and predict the future trends of the different commodities. In order to
minimize the risk of price fluctuations taking positions at different prices is more
effective.
According to the market projections it was expected that the gold follows a bullish trend
for the month of November 2011, so it was easy to take positions in gold.







Financial Derivatives Term Report



Daily Trading Activity

Starting Equity : $3000
Gross profit : $ 1046.05
Gross Loss : $3348.53
Balance : $697.52
Day 1 (Nov 1)
By observing the position of the market and after having shown the graphs, it was seen that taking short
position would be a viable decision. So after analysing the market, we took the short position which
proved to be the reversed and market moved upward hence we occurred loss of 413 in the first half
hence looking into the situation and not to get involved further we close the position on the same day
and decided not to trade emotionally.
Day 2 (Nov 2)
Again on the very second day we obsered that as market has gone up In the previous day and also graph
were showing the bullish position. We decided on th basis of it that we should take a short position
again. Our decision went wrong again and this time we occur huge loss. Emotionally decided not to close
the position on the very same day and take it to the other day which proved to be a blunder and hence
we occur loss of 1580.
Day 3 (Nov 3)
On the very day we searched different websites and after having complete information of the trends we
enter into the market and traded three times and took different positions according to the market
trend. We had profits on every move and hence this day proved to be a learning experience for us. One
long and two short position were taking and a total profit of 270.50. with a very limited equity it was a
greater deal and we successfully accomplished our objective.
Day 4 (Nov 4)
After having a good experience on the previous day we initiated our trading and searched the market for
it. Keeping safe hands and looking to different websites we obsered a late entry and were successful in
Financial Derivatives Term Report


our strategy hence we made a profit of 82.50. By taking a short position we earned our mark and
another day went successful of learning experience. Also close the position at the end of the day.


Day 5 (Nov 7)
After improved on equity we were delighted and were trading on the basis of market and have full
information of the finance side atleast. This very day went good at the begning and were observing
profits in the first two session but at the end of the day everything was mess up and profits that were
made in the begning were turned into the losses and the loss was huge that I was unable to trade more.
In the first two session we took long position as charts and graphs were suggesting and earned an
accumulated profit of 693, which was an achievement for us. We were more than delighted and were
emotionally involved and as our equity improves we were in a position to trade more with that and
hence we traded more and lost almost 80% of the equity.
This was the end of our trading session and we were unable to trade more. This might be because of the
Greece effect that the market went against us and hence we were stoped!!

Lessons Learnt:
From the trading the experience and the lesson we learnt that
Expecting the prices of the gold is very difficult
Never depend on the single factor
Analyze the market properly
Get in touch with the agent on daily basis
Though safer heaven but it has its own downsizes
Dont trade emotionally
Always be updated about the market and the news around the world
Every single news has a major impact on the market
Never take your position open and walk away
Be a rationale over your decision
Risk is the name of the game
Theoretical learning is different and practically is whole lot different
Always specify your profit limits and the planned losses otherwise you will be in hell lot trouble


Financial Derivatives Term Report


ACM Gold

Account: 949002938 Name: MUNESH KUWAR IoBM 10318 Currency: USD 2011 December 7, 12:52
Closed Transactions:

Ticket Open Time Type
Volum
e
Item Price
S /
L
T /
P
Close Time Price
Commissio
n
Taxe
s
Swa
p
Profit
1321318
6
2011.10.26
16:47
balanc
e
Deposit
3
000.0
0
1325770
4
2011.11.01
13:12
sell 0.20
xauus
d
1698.7
5
0.0
0
0.0
0
2011.11.01
21:21
1719.4
0
0.00 0.00 0.00
-
413.0
0
1327147
4
2011.11.02
16:23
sell 0.50
xauus
d
1727.0
0
0.0
0
0.0
0
2011.11.03
15:57
1758.6
0
0.00 0.00 0.27
-1
580.0
0
1328379
7
2011.11.03
16:00
buy 0.20
xauus
d
1762.6
5
0.0
0
0.0
0
2011.11.03
22:11
1767.7
0
0.00 0.00 0.00
101.0
0
1328832
3
2011.11.03
22:13
sell 0.30
xauus
d
1766.3
0
0.0
0
0.0
0
2011.11.03
22:38
1764.9
5
0.00 0.00 0.00 40.50
1328842
0
2011.11.03
22:45
sell 0.30
xauus
d
1763.1
0
0.0
0
0.0
0
2011.11.04
05:40
1758.8
0
0.00 0.00 0.05
129.0
0
1328962
8
2011.11.04
05:41
sell 0.30
xauus
d
1758.2
0
0.0
0
0.0
0
2011.11.04
22:11
1755.4
5
0.00 0.00 0.00 82.50
1330436
5
2011.11.07
11:30
buy 0.20
xauus
d
1764.9
0
0.0
0
0.0
0
2011.11.07
17:49
1779.0
5
0.00 0.00 0.00
283.0
0
1330907
6
2011.11.07
17:49
buy 0.40
xauus
d
1779.8
5
0.0
0
0.0
0
2011.11.07
20:32
1790.1
0
0.00 0.00 0.00
410.0
0
1330988
7
2011.11.07
20:32
buy 0.50
xauus
d
1791.2
0
0.0
0
0.0
0
2011.11.09
22:19
1764.1
5
0.00 0.00
-
3.30
-1
352.5
0
0.00 0.00
-
2.98
-2
299.5
0
Closed P/L: -2 302.48
Open Trades:
Ticket Open Time Type
Volum
e
Item Price
S /
L
T /
P
Price
Commissio
n
Taxe
s
Swa
p
Profit
No transactions

0.00 0.00 0.00 0.00
Floating P/L: 0.00
Working Orders:
Ticket Open Time Type
Volum
e
Item Price
S /
L
T /
P
Market Price
No transactions




























Financial Derivatives Term Report


Summary:
Deposit/Withdrawal: 3 000.00 Credit Facility: 0.00
Closed Trade P/L: -2 302.48 Floating P/L: 0.00 Margin: 0.00
Balance: 697.52 Equity: 697.52 Free Margin: 697.52

Details:
Gross Profit: 1 046.05 Gross Loss: 3 348.53 Total Net Profit: -2 302.48
Profit Factor: 0.31 Expected Payoff: -255.83
Absolute Drawdown: 2 302.48 Maximal Drawdown:
2 302.48
(76.75%)
Relative Drawdown:
76.75% (2
302.48)

Total Trades: 9
Short Positions (won
%):
5 (60.00%)
Long Positions (won
%):
4
(75.00%)
Profit Trades (% of total): 6 (66.67%)
Loss trades (% of
total):
3
(33.33%)
Largest profit trade: 410.00 loss trade: -1 579.73
Average profit trade: 174.34 loss trade: -1 116.18
Maximum consecutive wins ($): 6 (1 046.05) consecutive losses ($):
2 (-1
992.73)
Maximal consecutive profit (count): 1 046.05 (6)
consecutive loss
(count):
-1 992.73
(2)
Average consecutive wins: 6 consecutive losses: 2




Financial Derivatives Term Report




Financial Derivatives Term Report