Asian Markets

[MC]

I know little of these markets but wanted to set this up for someone to take the helm.
Hopefully we'll get a taker for this thread.

[filter_sweep]

I’ll take a stab at this since this is what I’ve been studying and trading for the last 8 months or so.

If you are interested in trading any of the Asian futures, and you live in the US, the only broker that I am aware of that gives you access to these markets is Interactive Brokers (IB). Now I know that IB tends to get bad mouthed from time to time, but from my experience, they have been awesome. Just don’t expect any hand holding. One thing… if you plan to trade Asian futures, make sure you have IB put you on their Hong Kong server farm, or else you’ll have to deal with nightly server reboot issues while you’re in the middle of a trade (not fun).

Which markets are the best to trade? That partly depends on your style. However, it should be noted that most of the Asian stock index futures are loosely correlated with each other (and the US markets to a degree as well). However, their structural differences (tick size, volume) present different opportunities for different trading styles. I don’t pay attention to interest rate futures, so here are the most liquid, tradable stock index futures I am aware of trading in Asia, not in any particular order:

1. Australia (SPI)
2. Japan (Nikkei 225)
3. Hong Kong (HSI)
4. Taiwan (STW)

There are others (Korea for example), but the 4 above are the ones I am most familiar with.

If you’re interested in the details of the margin requirements, trading hours, and commissions, I’d invite you to check out IB’s website for those details (no sense in me recreating their website here). However, here are some general notes that might help you determine which contract would suit you:

- I know the least about SPI, but it seems to be highly correlated with the Nikkei due to it’s large tick size. I have never traded SPI myself.
- The Nikkei 225 has a large tick size (5 index points), and closes for a lunch break after a 2 hour (cash market) morning session. The morning session tends to be range bound (usually around 20 ticks), and the afternoon session tends to be more trendy. There are actually 3 Nikkei contracts trading on two exchanges: Osaka, which has the full size, and a mini (500 yen/tick), and the SGX exchange in Singapore has a mid-size version (2500 yen/tick). There is more volume on the Osaka mini contract (almost like the ES), but the SGX contract is the most efficient in terms of tick to commission ratio.
- If you want to trade HSI, you’ll need deep pockets and an iron stomach. The book is very thin due to a small tick size (1 index point… intraday swings can be as much as 500-1000 points). It trends very well, but you’ll have to adopt a slightly different strategy and mindset regarding entries and exits due to slippage. I personally have not traded HSI with real money.
- The Taiwan contract is what I primarily trade these days. It tends to trend well on the 1 minute and 5 minute timeframes. It does not have a ton of volume though (think YM style volume), which makes it an easy target for manipulation. Also, some days (nights) it presents very few trading opportunities due to lack of movement. However, it has a decent tick size ($10 tick, tick size of .10), and if you want to make .50 scalps, there will be a several of those for the taking on most nights. It can get out and run though, so don’t get caught counter-trend trading, sometimes it makes parabolic moves and I’d hate to be on the other end of those.

Anyway, there’s an overview. If anyone’s interested in any of the details, let me know!