commodity market ppt

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WELCOME TO THE PRESENTATION ON A STUDY ON SUCCESS RATE OF CANDLESTICK FORMATION ON COMMODITIES AT ADITHYA TRADING SOLUTIONS PVT.LTD, TIRUPATI. Under the guidance of Venkatrao MBA,M.Phil.., Asst.Professor, Department of MBA . Submitted By Sabitha.E 093G1E0017

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Organization of the Presentation 1. Introduction 2.Industry Profile 2.2 Company profile 2.3 product profile 3. Research Methodology 3.1 Need For the Study 3.2 Scope of the Study 3.3 Statement Of The Problem 3.4 Objectives of the Study 3.5 Research Design 3.6 Period of the study 3.7 Limitations 4. Review of literature 5. Data Analysis and Interpretation 6. Findings 7.Suggestions 8. Conclusion

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Introduction : Technical analysis is the process of analyzing a securities historical price in an effort to determine probable future prices. This is done by comparing current price action (i.e current expectation) with comparable historical price action to predict a reasonable outcome. . A commodity market is a market where various commodities and derivatives products are traded. Most commodity market across the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, metals, etc.) and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures .

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Industry Profile : Stock market refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces (i.e. demand and supply for a particular stock).. Multi Commodity Exchange (MCX) MCX offers futures trading in Agricultural Commodities, Bullion, Ferrous & Non-ferrous metals, Pulses, Oils & Oilseeds, Energy, Plantations, Spices and other soft commodities. Multi Commodity Exchange (MCX) is an independent commodity exchange based in India. It was established in 2003 and is based in Mumbai

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STRUCTURE OF THE COMMODITY MARKET

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Company profile: Aditya Trading Solutions Private Limited (ATS) are a full spectrum INVESTMENT MANAGEMENT house specializing in online commodity trading. We are one of the earliest members of MCX and pioneers of online commodity broking in TAMILNADU. ATS is promoted by young and dynamic entrepreneurs who have years of proven experience in international derivative markets like NYMEX and worked with several FORTUNE 500 companies. We are the largest online commodity Trading Company in Tamilnadu. Our Client base consists of a long list of satisfied institutional and retail client base broking. BSE NSE MCX NCDEX NMCE

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Products & Services of Aditya Trading Solutions : Trading (Equity/Derivative/Commodity) IPO's Depository Services Arbitrage Margin Financing Sale of Mutual Funds Online Trading PMS

Product profile: 

Product profile Gold Silver Aluminum Copper Crude Oil Natural Gas

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3.1 NEED FOR THE SUTDY: Commodity market provides a good source of investment, where investors do not come forward to invest due to lack of proper information. Hence there arise a need of descriptive study in commodity market. 3.2 SCOPE OF THE STUDY: The study is confined to Indian commodity market and only few commodities are evaluated using candlestick chatting. in the two months period of time. 3.3 STATEMENT OF THE PROBLEM: Many investors wants to trade commodities in commodities market for getting better returns, but some of them not having proper information about when have to invest or trade commodities in commodity market. Main problem for this is insufficient information and improper knowledge about commodity price fluctuations in the commodities market. 3. Research Methodology

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3.4 OBJECTIVES OF THE STUDY: The present study of primary objective is to study the success rate by using candle stick formation on mcx along with some specific objectives are: To understand the commodities market in India. To understand commodity future market To calculate the Success Rate of candlestick pattern. To suggest investment (Buying or Selling ) decisions 3.5 Research design 3.5.1 PRIMARY DATA The primary data comprises information obtained from sub brokers of Aditya Trading Solutions. 3.5.2 SECONDARY DATA Secondary data was collected through website of the company and web site of Multi Commodity Exchange (MCX) & Aditya Trading Solutions. 3.5.3 SAMPLE: Sample of this project is base Metals, Energy, Precious Metals, (gold, silver, aluminum, copper, crude oil ,natural gas.)

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3.5.5 TOOLS OF THE STUDY: Success ratio’s of Doji Hammer Inverted Hammer Bullish engulfi Bearish engulfi 3.6 Period of the study The study is confined to the project period for a duration from 9-6-2011 to 20-7-2011,at adthya trading solutions private limited, tirupati. 3.7 LIMITATIONS In depth study of the topic was not possible due to time constraint. Everything should be considered at market movement. Only few commodities were studied through Doji , hammer, inverted hammer, bullish, bearish engulfi. Same outcomes may not be for all commodities.

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4. Review of literature History: The Japanese began using technical analysis to trade rice in the 17th century. While this early version of technical analysis was different from the US version initiated by Charles Dow around 1900. Formation: In order to create a candlestick chart, you must have a data set that contains open, high, low and close values for each time period you want to display.

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TYPES OF PATTERNS IN CANDLESTICKS: Doji Hammer Inverted Hammer Bullish Engulfing Bearish Engulfing

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Doji: Doji are important candlesticks that provide information on their own and as components of in a number of important patterns. Doji form when a security's open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns. Any bullish or bearish bias is based on preceding price action and future confirmation. The word "Doji" refers to both the singular and plural form

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Hammer The Hammer is a bullish reversal pattern that forms after a decline. In addition to a potential trend reversal, hammers can mark bottoms or support levels. After a decline, hammers signal a bullish revival.

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Inverted Hammer The Inverted Hammer and Shooting Star look exactly alike, but have different implications based on previous price action. Both candlesticks have small real bodies (black or white), long upper shadows and small or nonexistent lower shadows. These candlesticks mark potential trend reversals, but require confirmation before action

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Bearish Engulfing The bearish engulfing pattern consists of two candlesticks; the first is white and the second black. The size of the white candlestick is not that important, but should not be a doji, which would be relatively easy to engulf. The second should be a long black candlestick. The bigger it is, the more bearish the reversal. The black body must totally engulf the body of the first, white, candlestick. Ideally, the black body should engulf the shadows as well, but this is not a requirement. Shadows are permitted, but they are usually small or nonexistent on both candlesticks.

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Bullish Engulfing The bullish engulfing pattern consists of two candlesticks, the first black and the second white. The size of the black candlestick is not that important, but it should not be a doji which would be relatively easy to engulf. The second should be a long white candlestick – the bigger it is, the more bullish. The white body must totally engulf the body of the first black candlestick. Ideally, though not necessarily, the white body would engulf the shadows as well. Although shadows are permitted, they are usually small or nonexistent on both candlesticks.

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5. Data Analysis and Interpretation The data analysis and interpretations are carried out by using success ratios and technical analysis tools such as candlesticks formation. Success Rate = If the candlesticks cuts high then = High +Difference (H+D) If the candlesticks cuts low then = Low – Difference (L-D)

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Commodity Doji Hammer Inverted hammer Bullish engulfi Bearish engulfi total Gold 80% 80% 80% 80% 60% 76% silver 80% 80% 100% 80% 60% 80% Aluminum 80% 100% 80% 100% 100% 92% copper 100% 100% 60% 100% 80% 88% Crude oil 100% 80% 60% 80% 60% 76% Natural gas 100% 60% 100% 100% 75% 87% Success rate 90% 83.3% 80% 90% 72.5% 83.1% Duringall success rate of candlestick

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Commodity Profit Loss Net profit Commodity Gold 33500 11900 21600 Gold silver 102960 24870 78090 silver Aluminum 27000 2000 25000 Aluminum Copper 17150 2100 15050 Copper Crude oil 17400 4900 12500 Crude oil Natural gas 9400 850 8550 Natural gas Total 207410 46620 160790 Total Duringall profit & loss on commodities

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Findings Commodity market provides a good source of investment. Market movement is only according to supply and demand Investors have the choice of both physical delivery and Roll during contracts. Contract expiry period for each products are different. For gold-3 months, crude oil-2 months, copper-1 month. Any time there will be three contracts alive on execution for all commodities i.e. Current, near, and far. Premium will be charged for purchasing near and far months contracts. And premium charges will be different for near & far month contracts. The success rate of doji is 90% during the study period. The success rate of hammer is 83.3% during the study period. The success rate of inverted hammer is 80% during the study period. The success rate of bullish engulfi is 90% during the study period. The success rate of bearish engulfi is 72.5% during the study period. From the study the total success rate was found that 83.1%.

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Suggestions Market intermediaries should take more efforts on spreading awareness about commodity market. Risk in commodity market is low when you compare to equity & derivatives. Investment decisions can be taken through candlestick analysis. Silver, aluminum and gold fetch high profits when compared to other commodities. So I suggest to invest on these three products for gives high returns. Conclusion Based on the study it can be concluded that commodities provide good source of investment and decisions can be taken through candlestick analysis which is according to the market movement.

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BIBLIOGRAPHY BOOKS: 1.S.Kevin “Security Analysis and Portfolio Management” Prentice Hall of India,noida 2. Gregory Morris “Candlestick Charting Explained” vision books, New Delhi. WEBSITES: www.mexindia.com www.hotcandlesticks.com www.stockcharts.com www.chartschool.com www.moneycontrol.com wwwe.rediffmoneywizz.com www.stockta.com

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Sabitha .E 093G1E0017, MBA 4 th Semester, K.M.M.I.T.S, Tirupati. THANK ‘U’