Weekly Motivation

In addition to accepting losses and profits, there is one more thing that you need to accept if you choose to be a winning trader - you. You must learn what market triggers your self-limiting states so that you can alter your beliefs and behaviors by using the psychological skills that we have learned. This will enable you to move easily from inhibiting to resourceful state of mind.

- Joseph Siegel

Weekly Motivation

Motivation and Reality

Top traders are not top traders because they have inherited a top trading gene. Winners are not born, they are made. The most compelling force in your development as a trader, or human being for that matter, is thinking you engage in and the beliefs about yourself and the environment you choose to accept as ‘real’. If you do not believe in failure and deny its reality, you cannot be defeated. The only “real” limitations on what you can accomplish are those you impose on yourself. You are EMPOWERED TO CREATE YOUR OWN REALITY.

-- Robert Koppel

FKLI December 2005 – Oops! Trade 43 – Closed with a net loss of RM150

Trade Planning and Management

December 21, 2005

FKLI Spot Chart as at December 20, 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.

Entry Strategy for Oops! Buy stop order during Rollover period (starting 22nd of the month):
a. Option 1: If the price of both Spot and Next month contract opens gapped down from prior day’s low, put a buy stop order 1 tick above prior-day low after FKLI opens.
b. Option 2: If either the price of Spot and Next month contract opens gapped down, do nothing.
c. Option 3: If the price opens flat or higher than prior day’s low, do nothing.

Entry Strategy for Oops! Sell stop order during Rollover period (starting 22nd of the month):
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 either the price of Spot and Next month contract opens gapped up, do nothing.
c. Option 3: If the price opens flat or lower than prior day’s low, do nothing.

Adding More Contracts and Re-entry Strategy
a. No adding more contracts 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
v. If there is no ascending or descending triangle target, use Fibonacci 161.8% as a possible target for trend-following Oops!.

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:
i. Open
ii. High and Low
iii. Last Done
iv. Prior day high / low (if not remembered or need confirmation)
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 892.5 for December contract even DJIA lost 30 points. Why? The January contract opened gapped-up as well at 885.5.
b. I hesitated for a white before taking the trade. Then, I called gained to check the price.
c. Finally, I called at 8:53am again to put in my sell stop order at 891.5, 1 tick below the previous day’s high.
d. I do not feel good about this trade. But there is a signal, I took it anyway.
e. I expected that my sell stop would be triggered between 9:01am and 10:00am.
f. I received a call from Apex at 10:30am to inform me that my sell stop was triggered at 891.5. I immediately put in my protective buy stop at 895.5, 1 tick above intra-day’s high.
g. I was busy with my 2006 planning that I did not monitor the trade.
h. At noon, the price was at 892. I still have a bit doubt of the trade. I told myself that if the price at MOC is greater than 891.5, will close my short position.
i. At 4:30pm, I checked the price. The price is at 892 and 894 range.
j. I felt like the pre-holiday trading may not be good.
k. I monitored the price at 5:05pm.
l. At 5:12pm, I closed my position at 893.5 at market order. The price closed at 893.5.
m. It is my 2nd FKLI loss in a row with net loss of RM150 (2xRM50 + RM50 commission).
n. But I did not felt as bad as my previous loss as I am following my trade management. If I do so in long run, I will be net winner.


Trade executed according to plan? Yes

What I have done best:
a. I follow Oops! entry, trade management and exit.
b. I closed my position even with a small loss. It is my Oops! rule.

What I need to improve:
a. I need to back-test Oops! method with trend-following and “close position on MOC if there is a loss” again for my 2006 planning.

What I have learned:
a. The premium or discount of FKLI and CI narrows during this pre-holiday season this year and last year.

Weekly Motivation

The Mental Game

If losing is equated with failure, the battle of confidence cannot be won.
Your motto should always be, "Win or lose, another step forward."
You can find success in a losing effort when you establish clear performance goals prior to the match. You have the potential to learn much more from a loss than a victory.
When you set your goals properly, your confidence can continue to grow, independent of your match's outcome.

- James Loehr

FKLI December 2005 – Oops! Trade 42 – Closed with a net loss of RM250

Trade Planning and Management

December 12, 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.

Entry Strategy for Oops! Buy stop order during Rollover period (starting 22nd of the month):
a. Option 1: If the price of both Spot and Next month contract opens gapped down from prior day’s low, put a buy stop order 1 tick above prior-day low after FKLI opens.
b. Option 2: If either the price of Spot and Next month contract opens gapped down, do nothing.
c. Option 3: If the price opens flat or higher than prior day’s low, do nothing.

Entry Strategy for Oops! Sell stop order during Rollover period (starting 22nd of the month):
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 either the price of Spot and Next month contract opens gapped up, do nothing.
c. Option 3: 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
v. If there is no ascending or descending triangle target, use Fibonacci 161.8% as a possible target for trend-following Oops!.

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:
i. Open
ii. High and Low
iii. Last Done
iv. Prior day high / low (if not remembered or need confirmation)
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.
f. I may close my position before 22nd of December because of the longer holiday and roll-over period.

My actual Entry strategy
a. I called Apex to check the Open. I thought that I would have an ID-NR4 trade. But the December contract opened gapped up at 890. I was confused my Foong’s price information. But Joanne called to clarified and I put in my sell stop order at 889, 1 tick below previous day’s high.
b. My buy stop order was triggered at 889 at 9:35am. I called to put in my stop at 893, 1 tick above the intra-day’s high.
c. The price then moved down further to 887.5. I did not monitor much as I am preparing my 2006 planning.
d. The CI moved down as well as the FKLI contracts. The price hit 885.5 at noon.
e. After lunch, the price hit the low of 884.5 before moving up again.
f. The CI dropped as much as 2.6 points before closing 1.25 points lower. It is as usual. The last-minute buy up pushed the CI to higher low.
g. I checked the price at 5:12pm; the price is at the range of 885 and 886. I decided to leave the trade overnight.

Trade executed according to plan? Yes

December 13, 2005
Today’s Trade Management:
a. The price may open flat or lower as DJIA lost 10.81 points overnight.
b. Call Apex at 8:45am to check the opening price.
c. 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-up.
iii. If the price opens higher, flat or lower, put your sell stop order at 893.
d. Possible Exits:
i. MOC
ii There is a price extreme – a long white candle with close near the high or a long black candle with the close near the low with blow-off volume.
iii. If there is 10-point profit.
iv. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
v. Use Fibonacci 161.8% as a target if it is trend-following Oops!
e. Subsequent Trailing Stop:
i. 889, the breakeven point and 1 tick above the mid-point of previous day’s bar after the price breaks 884, 1 tick below the previous day’s low.
ii. 885, 1 tick above the previous day’s low, if the price breaks 882.

My actual trade management:
a. I called Apex at 8:47am to put my stop. Joanne informed me that the December contract had not opened.
b. Joanne called to inform me that December contract opened at 885. I immediately put my stop at 893, 1 tick above previous day’s high.
c. I checked the price at 9:30am, the price moved up to 888.
d. At noon, the price closed at 889.5 with lower volume. I knew the market may in the side-way. I let the position open and may close if it moves down as the price is in side-way but the CI gained nearly 3 points.
e. I received a call from Ben at 3:20 to inform me my buy stop is trigged at 893. I lost RM250 (4xRM50 + RM50 commission).
f. I checked the CI. It gained more than 4 points.
g. I knew the market may go side-way or up as the 870.5 is the current low.
h. There is a possible Head and Shoulder Bottom formation as there is a Head and Shoulder top formation.

Trade executed according to plan? Yes

What I have done best:
a. I follow Oops! entry.

What I need to improve:
a. I still felt bad as I lost. Hei, it is part of the business. As long as my stop is small and I consistent follow my trade management rules, I will be a winner in long run.

What I have learned:
a. My 8-point bar stop is very effective. I will modify a bit to suit my rules.

FKLI Dec 2005 - No ID-NR4 Trade as price opened gapped-up

Trade Planning and Management

For more information of ID-NR4, please refer the following book:

December 12, 2005
1. If the price opens gapped-up or down, use Oops! entry.

2. Entry Strategy for Buy stop order
a. Option 1: The price opens higher than 890
i. Do nothing
ii. If the price near MOC is a whiplash, do nothing.
iii. If the price near MOC is higher the open, buy at MOC with risk <>
b. Option 2: The price opens lower than or equal to 890
i. Put a buy stop order at 890 after FKLI opens for the whole day.
ii. If the order is triggered, put a sell stop order at 884.
iii. If the price closes down below the entry price, cover your long.
c. Option 3 If the market does not appear what you expect, do not trade and stay side-lined to analyze.

3. Entry Strategy for Sell stop order
a. Option 1: The price opens lower than 884
i. Do nothing
ii. If the price near MOC is a whiplash, do nothing.
iii. If the price near MOC is lower than the open, sell at MOC with risk <>
b. Option 2: The price opens higher than 884
i. Put a sell stop order at 884 after FKLI opens for the whole day.
ii. If the order is triggered, put a buy stop order at 890
iii. If the price closes above your entry price, cover your short.
c. Option 3: If the market does not appear what you expect, do not trade and stay side-lined to analyze.

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

5. Trailing Stop
a. The protective stop cannot increase your risk (loss) and reduce your profit unless No 6 and 7 below.
b. The protective stop cannot give back more than 6 points of unrealized profit.
c. When the trade is profitable, move your protective stop to the breakeven point. Trail your stop.
d. 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.
e. 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.
f. 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.
g. 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.
h. 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.
i. The maximum loss is 10 points or high/low of the next bar if the price gaps 6. Exit Strategy for Buy Stop Order a. If the price does not move up above your entry price and the trade is not stopped out for 3 trading days, get out at MOC on the third day. b. Let the trailing buy stop follow the price until it is taken out.

7. Exit Strategy for Sell Stop Order
a. If the price does not move up below your entry price and the trade is not stopped out for 3 trading days, get out at MOC on the third day.
b. Move stop order to breakeven point if the price moves in your favor.
c. Use trailing stop based on the chart’s support and resistance for trade management.
d. Get out of the trade when the price hit extreme and get in at different direction if the price gaps.

8. Today’s Entry strategy and Trade Management:
a. Call Apex at 8:45am to check the open. Then I will put in buy and sell stop orders if there is no gaps.
b. If either order is triggered, ask Apex to call you.
c. Move stop order to breakeven point if the price moves in your favor.
d. Use trailing stop based on the chart’s support and resistance for trade management.
e. If the price closes lower than the entry price for buy stop order, close the position at MOC. If the price closes higher than the entry price for sell stop order, close the position at MOC.
f. Get out of the trade when the price hit extreme and get in at different direction if the price gaps.
g. If the price does not move up or down fast in 3 days and the trade is not stopped out, get out at MOC (Market on Close) on the 3rd day.
h. I may close my position before 22nd of December because of the longer holiday and roll-over period.

9. My actual Entry Strategy and Trade Management
a. The price may open higher as DJIA gained 23.46 points overnight.
b. I called Apex at 8:45am to check the open for December contract. Foong of Apex told me that the price opened at 883.5, Low of 883.5 and High of 884.
c. I asked him whether the price opened gapped down. He is confused. I asked him again what was the price that December contract opened? He told me that 890. I said thanks to him.
d. I pondered for a while and decided to call Joanne of Apex for clarification and possible Oops entry.
e. Joanne called and informed that the December contract opened at 890 with high of 891 and low of 890.
f. I put my sell stop order at 889 for Oops! Sell

10. Trade executed according to plan? Yes

11. What I have done best:
a. I follow ID-NR4 trade management.
b. I ask for clarification for the Open, High and Low.
c. My trade execution is automatic.

12. What I need to improve:
a. I will continue to follow my trade management rules and discipline.

13. What I have learned:
a. The FKLI price will open gapped up with a 23-point gain of DJIA.

Weekly Motivation

Every Winner has scars

Life is a classroom in which you are being tested, tried and passed.

You cannot predict what will happen to you.
But, you can decide what happens inside you, how you take it, and what you do with it.

The real test of living is how you take each experience and make it a thing worth and beauty.
Everything you go through has some value.

The highest quality of success and character must be earned.

FKLI Dec 05 Oops! Trade – Sell Stop Not Triggered

Trade Management

Dec 06 2005 Prices: O=877,H=883,L=874.5,C=883. For more information of Oops! setup, please refer to the following book:

My actual Entry strategy
a. I called Apex late at 8:47. Foong informed me that the price opened at 883.5. I immediately put a sell stop order at 882.5. Currently, the price is at 884.5.
b. AT 8:53am, I wanted to make sure that Foong got me right. I called Apex. Joanne informed me that the price opened 883.5 (gapped-up).
c. I asked the high and low. She told that 884.5 is the high and the low is 882.5.
d. I asked her whether my sell stop order was triggered. She told me that it was not triggered.
e. I did not check the price as I wanted to simulate at-work trading and I was outside doing other things.
f. At 10:50am, I checked the price, the price opened gapped-up at 883.5 and hit 882.5 in a short-time and moved up. It was 887 with high of 888. I felt lucky that that I called late.
h. At 12:05pm, I cancelled my sell stop order of 882.5 because the risk is more than 6 points. The current high is 890.5.

Trade executed according to plan? Yes

What I have done best:
a. I follow Oops! entry.
b. I cancel my sell stop order because the risk is more than 6 points for Oops! entryl.

What I need to improve:
a. I need to improve the script for Oops! entry as there are 5 Apex dealers with each has different call handling method.

What I have learned:
a. If there is a morning or evening shooting star with higher volume than that of previous day, there is a high possibility of reversal.

Adding More Contracts to My FKLI Trades

My Adding-to-winner Rules for FKLI

Entry Rules
a. I can use breakout on recent new high or low, Oops! or ID-NR4 to add more contracts to my trade if there is a trend in the daily or weekly chart.
b. The new additional contracts have its own stop loss. The stop loss is more tightened than the previous entries.
c. The existing trade must be profitable before adding more contracts .
d. My current adding-to-winner strategy is that I will add more contrtacts to my trades with:
i. one additional contract if my account is more than RM5,000.
ii. two additional contracts if my account is more than RM7,500.
iii. three additional contracts if my account is more than RM10,000.

Entry Rules
a. Take partial profit
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
v. If there is no ascending or descending triangle target, use Fibonacci 161.8% as a possible target for trend-following.
b. Exit all if all the trailing stops are triggered.

The Psychology of Adding to the Winner
a. The more additional contracts are executed, there will be more risk and more irrational or emotional trading has become.
b. Sometimes, adding more contracts may not be successful as the trend may have reached its end after ID-NR4, Oops! and breakout of recent high or low.

The benefits of Adding-to-winner
a. The most profitable or home-run trades are usually coming from trades that have additional contracts.
b. It follows the classic golden rule of "Add to the winners while letting profit runs".

Actions:
a. I need to back-test adding-to-winner with trend using my entry signals.

Weekly Motivation

The highway to success is a toll road

You must give up something to get whatever you want in life.
The greater the value, the greater the sacrifice that will be required.
Everything has a price.

Nothing worthwhile will come easily to you.
Work, continuous work and hard work is the only way to accomplish the results that last.

You pay a price if you want to make things better, and you pay a price for just leaving things as they are.

You'll find no success at bargain basement prices.