FKLI Trades – November 07, 2005 to November 15 05

FKLI November 2005 – Oops! Trade 39 – Closed with a net gain of RM1175

FKLI Spot Month Chart on November 02 05

Trade Planning and Management

November 7, 2005

Entry Strategy for Oops! Buy stop order
a. Option 1: If the price opens gaps down from prior day’s low, put a buy stop order 1 tick above prior-day low after FKLI opens.
b. Option 2: If the price opens flat or higher than prior day’s low, do nothing.

Entry Strategy for Oops! Sell stop order
a. Option 1: If the price opens gaps up from prior day’s low, put a buy stop order 1 tick below prior-day low after FKLI opens.
b. Option 2: If the price opens flat or lower than prior day’s low, do nothing.

Pyramiding and Re-entry Strategy
a. No Pyramiding and Re-entry Strategy

Trade Management
a. If the stop order is triggered, put a stop order:
i. 1 tick below the intra-day’s low for Buy stop order.
ii. 1 tick above the intra-day’s high for Sell stop order.

b. Exit Strategy
i. MOC – if the price hits extreme in your favor. The extreme is when a long outside-day is formed with Close near Low or High. Close at 5:14pm.
ii. Next day‘s Open – if the trade is profitable but the price is not extreme, leave it over-night. Exit next day’s Open if the price gaps in your favor.
iii. Next day’s Close – if the price hits extreme in your favor. The extreme is when a long candle is formed with Close near Low or High. Close at 5:14pm
iv. 10 to 16-point profit. – Exit immediately

c. Trailing Stop for Exit on Next day Close or subsequent days
i. The protective stop cannot increase your risk (loss) and reduce your profit unless No 6 and 7 below.
ii. The protective stop cannot give back more than 6 points of unrealized profit.
iii. When the trade is profitable, move your protective stop to the breakeven point. Trail your stop.
iv. When the trade is profitable, move your protective stop. Short Position: Move your stop to 1 tick above the open or high, whichever is lower, for sell stop but must be lower than your previous stop. Long Position: Move your stop to 1 tick below the open or low, whichever is higher, for buy stop but must be higher than your previous stop.
v. If the price moves in your favor, the trade is profitable and the prior day bar is a long bar (more than 8 points), move your stop 1 tick above or below the middle of the bar.
vi. Short Position: If prior-day’s bar is a long bar (8 points or more) and the today’s open is higher than prior day’s close but below the middle range of prior-day’s range, put your stop at 1 tick above the middle of prior-day’s range. Long Position: If prior-day’s bar is a long bar (8 points or more) and the today’s open is lower than prior day’s close but above the middle of prior-day’s range, put your stop 1 tick below the middle of prior day’s range.
vii. Short Position: If prior day bar is a long bar (8 points or more) and the today’s open is lower than prior day’s low, put your stop at 1 tick above the prior day’s low. Long Position: If prior day bar is a long bar (8 points or more) and the today’s open is higher than prior day’s high, put your stop 1 tick below the prior day’s high.
viii. Short Position: If prior-day’s bar is a long bar (8 points or more) and the today’s open is higher than both prior day’s close and middle range of prior-day’s range, put your stop at 1 tick above the prior-day’s high. Long Position: If prior-day’s bar is a long bar (8 points or more) and the today’s open is lower than both prior day’s close and middle of prior-day’s range, put your stop 1 tick below the prior day’s low.
ix. The maximum loss is 10 points or high/low of the next bar if the price gaps

Today’s Entry strategy:
a. Call Apex at 8:45am to check the opening price. .ASK Apex for the following before entering a trade:
- Open -High and Low - Last Done - Prior day high / low
b. If the price opens gaps up or down, put a stop order
c. Ask them to inform you when any trade is done. If the stop order is triggered, put a protective stop order based on intra-day High or Low.
d. Exit on MOC, next day‘s Open, next day’s Close or 10-point profit.
e. Let the trailing buy stop follow the price until it is taken out.

My actual Entry strategy
a. I called Apex to check the Open. The price opened gapped up at 917. I asked Quek of Apex whether I had enough margin to trade since the market requirement was raised before the long holiday. He said that it should be enough.
b. I asked the open, high low and previous day’s high. I then put a sell stop at 915.5.
c. At 8:50am, my stop is triggered at 915. It was my 3rd trade with slippage. According to Joanne, there are several of her clients using the same method as I do.
d. I told myself that I will not monitor so much the price so that I could maintain detachment. Anyway, I will follow Oops! trade management:
i. Let the trade run for the day unless you are stopped out.
ii. Close your position if there is a loss at MOC
e. The price went down 911 and never moved up to 915. I knew that I was right. Oops! has given too many whipsaws in the last few trades. That’s trading. Sometimes, a trade has to wait for 3 to 4 consecutive loss after a win. The win is usually big.
f. The price moved down. I am more worried on how I will handle the trade tomorrow.
g. The price moved to 909 near MOC. I will let the trade overnight.

Trade executed according to plan? YES

FKLI Spot Month Chart on November 07 05 after the trade is triggered at 915

November 8, 2005

Today’s Trade Management:
a. Call Apex at 8:45am to check the opening price.

b. Initial Trailing Stop:
i. If the price opens gaps down, close your position immediately. Remember, Oops! is most powerful this time. It is also price-extreme. If the price opens gapped up, do nothing initially. Close your position after 10:30am if the price stays gapped down.
ii. If the price opens higher, flat or lower, put your sell stop order at 918.5.

c. Possible Exits:
i. MOC
ii. There is a price extreme – a long white candle with close near the high.
iii. If there is 10-point profit.
iv. Let the trailing buy stop follow the price until it is taken out (if there is a down-trend)

d. Subsequent Trailing Stop:
i. The breakeven point, 915, after the price breaks 908, previous day’s low.
ii. 913.5, 1 tick above the middle point of the previous day’s bar, if the price breaks 905.

My actual trade management:
a. I called Apex. Quek told me the pre-quote is 910. I asked him to call back me when FKLI Nov opens.
b. He called to inform that the Nov contract opened at 910. I put my sell stop at 918.5. I am worried about whipsaw if I put my stop too close to the open. But I did follow my trade management.
c. I was at KLSE library so I was able to check the price. I tried not to monitor too close by reading books.
d. At 10:20am, the price broke previous day’s low of 808 to touch 906.5. I lowered my sell stop order to 915, the breakeven point.
e. I then let the price moves as CI is weak.
f. The price closed for the morning at its low of 905.5.
g. At 3pm, I lowered my stop to 913.5, one tick above the mid-point of previous day’s bar according to my trade management. Now, it is a profitable trade.
h. The price moved further down to 900 and close 902 with heavier volume.

Trade executed according to plan? YES


November 9, 2005

Today’s Trade Management:
a. Call Apex at 8:45am to check the opening price.

b. Initial Trailing Stop:
i. If the price opens gaps down, close your position immediately. Remember, Oops! is most powerful this time. It is also price-extreme.
ii. If the price opens gapped up, do nothing initially. Close your position after 10:30am if the price stays gapped down.
iii. If the price opens higher, flat or lower, put your sell stop order at 911, 1 tick above previous day’s high.

c. Possible Exits:
i. MOC
ii. There is a price extreme – a long white candle with close near the high and blow-off volume.
iii. If there is 10-point profit.
iv. Let the trailing buy stop follow the price until it is taken out (if there is a down-trend)

d. Subsequent Trailing Stop:
i. If the price broke 900, move the sell stop order to, 909, 2 ticks above the 2nd previous day’s low. ii. If the price breaks 895.5, move your sell stop order to 905.5.

My actual trade management:
a. I called Apex. Joanne told me that Nov contract opened at 900. I put my sell stop at 911. I am worried about whipsaw if I put my stop too close to the open. But I did follow my trade management.
b. The price moved down and broke 900 at 9:40am. I wanted to wait until 10:30am to lower my stop.
c. At 10:35am, the price lower my stop to 909 as planned as the price hot low of 894.5 and rebounded. The price stayed at 895 and 897 range for the whole morning and afternoon.
d. The price broke 894.5 and hit 893 as the crowd who bought at the support closed their trade at 4:40pm.
e. I did not do much as I watched the price. I should have lower my stop to 905.5 as the price stayed at 893 and 894 range.

Trade executed according to plan? Yes


November 10, 2005

Today’s Trade Management:
a. Call Apex at 8:45am to check the opening price.
b. Initial Trailing Stop:
i. If the price opens gaps down, close your position immediately. Remember, Oops! is most powerful this time. It is also price-extreme.
ii. If the price opens gapped up, do nothing initially. Close your position after 10:30am if the price stays gapped down.
iii. If the price opens higher, flat or lower, put your sell stop order at 902, 1 tick above previous day’s high.

c. Possible Exits:
i. MOC
ii. There is a price extreme – a long white candle with close near the high and blow-off volume.
iii. If there is 10-point profit.
iv. Let the trailing buy stop follow the price until it is taken out (if there is a down-trend)

d. Subsequent Trailing Stop:
i. If the price breaks 890, move the sell stop order to, 897.5, 1 ticks above the previous day’s mid point of 897.
ii. If the price breaks 885, move your sell stop order to 895.5.

My actual trade management:
a. I was driving and did not have call Apex. Joanne from Apex called me to inform me the open and OI. The open and OI is 894 and 19694 respectively. I put in my buy stop order at 902, 1 tick above previous day’s high.
b. The price then moved along 893.5 and 895.5. The price later felt to 892.5. I got away from the screen.
c. At noon, the price hit 890.
d. I regretted for not adding additional contract as the price broke 895.5 support as my margin is enough. However, I will not do so unless my account is more than RM6000.
e. At 3pm, the price moved further down as CI is losing as much as 7ppoints.
f. I decided to lower my stop to 897.5, 1 tick above the mid-point of previous day’s bar.
g. The price then moved down to the low of 887 before moving up to 888.5. I saw an AT formation. The price may hit as high of 892. The price did hit 892.5.
h. The price then moved up before closing as some traders closed their position for Friday. The OI tomorrow can give the cue of the crowd is doing.
i. The price then moved down to 889 and closed at 890.5 with lower volume than that of previous day.

Trade executed according to plan? Yes


November 11, 2005

Today’s Trade Management:
a. Call Apex at 8:45am to check the opening price.
b. Initial Trailing Stop:
i. If the price opens gaps down, close your position immediately. Remember, Oops! is most powerful this time. It is also price-extreme.
ii. If the price opens gapped up, do nothing initially. Close your position after 10:30am if the price stays gapped down.
iii. If the price opens higher, flat or lower, put your sell stop order at 897.5, 1 tick above previous day’s high.

c. Possible Exits:
i. MOC
ii. There is a price extreme – a long white candle with close near the high and blow-off volume.
iii. If there is 10-point profit.
iv. Let the trailing buy stop follow the price until it is taken out (if there is a down-trend)

d. Subsequent Trailing Stop:
i. If the price stays below 890, move the sell stop order to, 896.
ii. If the price breaks 885, move the sell stop order to, 891.5, 1 tick above the previous day’s mid point of 891.25.
iii. If the price breaks 880, move your sell stop order to 887.5, 1 tick above the previous day’s low of 887.

My actual trade management:
a. I was driving and did not have call Apex. Joanne from Apex called me to inform me the open and OI. The open and OI is 894 and 19694 respectively. I put in my buy stop order at 902, 1 tick above previous day’s high.
b. The price then moved along 893.5 and 895.5. The price later felt to 892.5. I got away from the screen.
c. At noon, the price hit 890.
d. I regretted for not adding additional contract as the price broke 895.5 support as my margin is enough. However, I will not do so unless my account is more than RM6000.
e. At 3pm, the price moved further down as CI is losing as much as 7ppoints.
f. I decided to lower my stop to 897.5, 1 tick above the mid-point of previous day’s bar.
g. The price then moved down to the low of 887 before moving up to 888.5. I saw an AT formation. The price may hit as high of 892. The price did hit 892.5.
h. The price then moved up before closing as some traders closed their position for Friday. The OI tomorrow can give the cue of the crowd is doing.
i. The price then moved down to 889 and closed at 890.5 with lower volume than that of previous day.

Trade executed according to plan? Yes

November 14, 2005

Today’s Trade Management:
a. Call Apex at 8:45am to check the opening price.
b. Initial Trailing Stop:
i. If the price opens gaps down, close your position immediately. Remember, Oops! is most powerful this time. It is also price-extreme.
ii. If the price opens gapped up, do nothing initially. Close your position after 10:30am if the price stays gapped down.
iii. If the price opens higher, flat or lower, put your sell stop order at 896.5, 2 ticks above 2nd previous day’s high. This because the market may move side-way.

c. Possible Exits:
i. MOC
ii. There is a price extreme – a long white candle with close near the high and blow-off volume.
iii. If there is 10-point profit.
iv. Let the trailing buy stop follow the price until it is taken out (if there is a down-trend)

d. Subsequent Trailing Stop:
i. If the price breaks 885, move the sell stop order to, 895, 1 tick above the previous day’s high.
ii. If the price breaks 880, move your sell stop order to 890.5, 1 tick above the intra-day’s high

My actual trade management:
a. I could check the opening. FKLI Nov opened at 890. I checked the OI is down 139. I put in my buy stop order at 897, 2 ticks above previous day’s high. I
b. I found out that it is 896.5, not 897. I lowered my stop to 896.5. I did not lower so much because the price may go side-way.
c. At 10am, the price hit 885.5. After 11am, it went down to 883.5. I lowered my stop to 895, 1 tick above previous day’s high.
d. I sit tight and started reading Tom Basso’s book on investment psychology. It really give me a lot on investment wisdom that I can use. I learned a lot.
e. The price moved between 882 and 884.5 in the whole after even some technical rebound in CI. The price closed 882.5 even the CI was down only 2.9x points.
f. The volume of CI is lower than prior day even the price moved lower and there is 2nd black hammer on CI. Be prepared.

Trade executed according to plan? Yes


November 15, 2005

Today’s Trade Management:
a. Call Apex at 8:45am to check the opening price.
b. Initial Trailing Stop:
i. If the price opens gaps down, close your position immediately. Remember, Oops! is most powerful this time. It is also price-extreme.
ii. If the price opens gapped up, do nothing initially. Close your position after 10:30am if the price stays gapped down.
iii. If the price opens higher, flat or lower, put your sell stop order at 890.5, 1 tick above previous day’s high.

c. Possible Exits:
i. MOC
ii. There is a price extreme – a long white candle with close near the high and blow-off volume.
iii. If there is 10-point profit.
iv. Let the trailing buy stop follow the price until it is taken out (if there is a down-trend)

d. Subsequent Trailing Stop:
i. If the price breaks 880, move the sell stop order to, 886.5, 2 ticks above the previous day’s mid-point.
ii. If the price breaks 875, move your sell stop order to 881.5, 1 tick above the previous day’s low.

My actual trade management:
a. I checked the opening online. FKLI Nov opened at 883.5. Since the price opened higher, I put my stop at 891.5, 2 ticks more than my planned stop at 890.5. The OI reached all-time high of 20782. The moving bandwagon is over-loading.
b. The price then moved down to 881 and broke 881 to hit low of 879.5. I lowered my stop to 890.5, 1 tick above previous day’s high.
c. But the price rebounded to the area of 881 and 884 at 9:50am.
d. I knew something was not right. But I just follow my trade management and get out until my stop is hit.
e. At 10:24am, the price shot up and reached 889 and the price moved down to 886.5 and 888 area. There is short-covering.
f. I asked myself should I cover now since the price is lower. I did not. I just follow my stop until I am stopped out.
g. The price hit 889 again at 11 something but failed to break it. The price then felt to 886. I thought that I am safe.
h. After CI closed for lunch, the FKLI Nov hit my stop at 890.5 and hit 891 high before closing for lunch.
i. After lunch the price moved down to hit 887 and close 886.5 with high volume of 4163. I also saw the downtrend line is broken. The short could not wait to take profit.
j. I follow my trade management to win. Money is not important.
k. However, I felt guilty for not taking profit at 883 when I felt not right after the price hit 879.5. The speculator takes profit after the price hit 880.

Trade executed according to plan? Yes

FKLI Spot Month Chart on November 15 05 after the buy stop is triggered at 890.5

What I have done best:
a. I follow my trade management rules strictly.
b. I let my stop is stopped out..

What I need to improve:
a. I need to back-test Oops! with trend following.
b. I need to change my emotion after being stopped out. I :
i. Felt guilty for not taking the profit earlier.
ii. Kept thinking of what I should have done better.
I can think of these:
i. It is part of the game of being stopped out and waste some profits.
ii. As a speculator, I just take a bit of the trend.
iii. Following the trade management rules to win is more paramount than counting the lost profit.
iv. Let’s move on to the next trade.

What I have learned:
i. I can pyramid my trade but each pyramid increases my risk. The stop has to be tightened.
ii. When the OI hit 20,000, the bandwagon is overloading, the momentum may stop. When those crowds cover their position, the price can shoot up or down very fast. When it happens, after the price shoot up or down, cover at a cheaper loss or profit.