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.