RSUSSH 2020

IN20-291 Trading Gold Online Futures with Simple Moving Average and Money Flow Index

Presenter: Oranush Poonyakanok
Rangsit University, Thailand

Abstract

           This research combines two indicators, Simple Moving Average or SMA (trend indicator) and Money Flow Index or MFI (momentum indicator) to use together for making the maximum net profit in TFEX Gold Online Futures market. The main objective of this research is to find the optimum parameters, periods of SMA, periods, oversold and overbought zone of MFI for trading. The Opening, High, Low, Closing prices and Volume from February 8, 2019 to February 7, 2020 of TFEX Gold Online Future in timeframe 15 minutes are analyzed in this research. The buy signal occurs when the MFI drop in oversold zone and the gold price crosses above SMA. The sell signal occurs when the MFI drop in overbought zone and the gold price crosses below SMA. The backtest results found that the best parameters to trade TFEX Gold Online Futures in timeframe 15 minutes is SMA 100 period, MFI 150 periods with oversold less than 50 and overbought greater than 55.

            Although the main idea of this research indicates the way to make profit from Gold Online Futures using only technical analysis which does not concern the factor that influence physical gold prices, sometimes this way is too risk. Because of there are many factors that suddenly change the gold prices before the technical analysis give a signal such as monetary policy, economic data, supply and demand, inflation, currency movements, uncertainty, etc. Therefore, the better way is to use that factor combine the technical analysis together for making more chance and more profit.

Keywords: Trading Gold; Simple Moving Average; Money Flow Index

Citation format:

Poonyakanok, O., Julruksa, N., Charoenpanitseri, W., Wangvongcharoen1, H., Panyayong, N., & Chanthaweeroaj, P.. (2020). Trading Gold Online Futures with Simple Moving Average and Money Flow Index. Proceeding in RSU International Research Conference, May 1, 2020. Pathum Thani, Thailand.

QUESTIONS & ANSWERS

Siriwan Wasukree (Visitor)

Your research is very useful. Why do you choose the SMA and MFI indicators?

 

Weerawat Liemmanee (Visitor)

The nice result. 

I have some questions. 
1. Who is TFEX?
2. How are futures different to stocks?
3. What is the different between Gold Futures and Gold Online Futures?
Thank you very much for your kind answer

นิธิภา อาจฤทธิ์ (Visitor)

I have some question.

Why are you interested in researching with gold online future?

Oranush Poonyakanok (Presenter)

Dear Weerawat Liemmanee,

               Thank you for your comment and question. There are my answers:

Question 1 : Who is Thailand Futures Exchange (TFEX)?

Answer : Thailand Futures Exchange (TFEX) is a subsidiary of the Stock Exchange of Thailand (SET) and was established on May 17, 2004 as a derivatives exchange. 

Question 2: How are futures different to stocks?

Answer : Stocks are issued by public company. When you buy stocks you own part of that public company. However, futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date.

Question 3:

What is the different between Gold Futures and Gold Online Futures on TFEX?

Answer :

Gold Futures Contract Specification:

                Ticker Symbol : GF

                 Underlying Asset : Gold Bullion with a purity of 96.5%

                 Contract Size : 10 Thai Gold Baht or 50 Thai Gold Baht

                 (1 Thai Gold Baht = 15.244 grams)

Gold Online Futures Contract Specification:

               Ticker Symbol : GO

               Underlying Asset : Gold Bullion with a purity of 99.50% and traded in THB

               Contract Size : 1 contract = 300 multiplier of the reference price per troy ounce.

               (1 troy ounce = 31.1040 grams).

                             

                              Sincerely,

                              Oranush Ponyakanok.

Oranush Poonyakanok (Presenter)

Dear นิธิภา อาจฤทธิ์,

Thank you for your question. Trading on gold and its derivatives become a more interesting investment option. TFEX Gold Online Futures is one of the popular TFEX product, is a Futures contract that is one types of financial derivative with gold as an underlying asset. Some investors believe that gold is safe haven, because the characteristic of gold price movement do not correlate with the equity market, makes gold futures a very interesting investment option.

               Sincerely,

               Oranush Ponyakanok.

 

Oranush Poonyakanok (Presenter)

Dear Siriwan Wasukree,

Thank you for your comment and question. There are many categories of technical analysis. We choose SMA and MFI because the moving average (MA) is a simple technical analysis tool that smooths out price data by creating a constantly updated average price but the Money Flow Index is a momentum indicator that tells us how much money is flowing in and out in any security over time or is also known as volume-weighted RSI that starts with the typical price for each period that uses both price and volume to measure buying and selling pressure.

               Sincerely,

               Oranush Ponyakanok.