Weekly Motivation - Time Tested Classic Trading Rules - Part 5

Time Tested Classic Trading Rules for the Modern Trader to Live (41 to 50 of 50)

This is a list of classic trading rules that was given to me while on the trading floor in 1984. A senior trader collected these rules from classic trading literature throughout the twentieth century. They obviously withstand the age-old test of time. I'm sure most everybody knows these truisms in their hearts, but this list is nicely edited and makes a good read.

41. Never volunteer advice and never brag of your winnings.
42. Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss.
43. Standing aside is a position.
44. It is better to be more interested in the market's reaction to new information than in the piece of news itself.
45. If you don't know who you are, the markets are an expensive place to find out.
46. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word - Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen.
47. Except in unusual circumstances, get in the habit of taking your profit too soon. Don't torment yourself if a trade continues winning without you. Chances are it won't continue long. If it does, console yourself by thinking of all the times when liquidating early reserved gains that you would have otherwise lost.
48. When the ship starts to sink, don't pray - jump!
49. Lose your opinion - not your money.
50. Assimilate into your very bones a set of trading rules that works for you

By Linda Bradford Raschke

FKLI March 2006 – ID-NR4 Trade 6 – Closed with A Net Gain of RM275

Trade Planning and Management

FKLI Spot Month Chart As At March 8 2006

Date Contract Open High Low Close Note
Mar 08 06 Mar 06 907.0 910.5 905.5 907.5 ID-NR4
Mar 08 06 Apr 06 905.0 906.0 902.0 904.0 ID-NR4

There is a upward bias and there is a possible technical rebound on CI because:
o There are 7 black candles. It is very bearish.
o The volume decreases as the price moves lower
o The price hit the major trend-line and moves up
o The price hit the Fibonacci retracement levels
o There price is near 200-SMA
o The price is forming ABC correction of in Wave 4
o The price is still at the higher low of an up-trend.

March 9, 2006

Entry Strategy for Buy stop order
a. Option 1: The price opens higher than 910.5
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 910.5
i. Put a buy stop order at 911 after FKLI opens for the whole day.
ii. If the order is triggered, put a sell stop order at 904.5, 1 tick below recent low.
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.

Entry Strategy for Sell stop order
a. Option 1: The price opens lower than 905.5
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

2. Entry Strategy for Sell stop order
a. Option 1: The price opens lower than 905.5
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 905.5
i. Put a sell stop order at 905 after FKLI opens for the whole day.
ii. If the order is triggered, put a buy stop order at 911
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.

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

4. 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

5. 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.

6. 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.

7. Today’s Entry strategy and Trade Management:
a. Call Apex at 8:45am to check the open and put in buy and sell stop orders.
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.

8. My actual Entry Strategy and Trade Management
a. I called Apex at 8:45am to check the open. The price opened higher at 909. I immediately put in my buy stop at 911.
b. My stop is triggered at 911 at 8:49am before CI opened. I put my sell stop order at 904.5, 1 tick below recent low.
c. The price the hit high of 911.5 but failed to break it in 4 attempts in the morning.
d. The price then broke 911.5 and hit 912.5. it then broke 912.5 to hit 914. 914 is the target of AT of 909 to 911.5.
e. The price then moved up to 917 as CI gained more than six points.
f. CI closed at the high with a gain of 7.39 points. FKLI March closed at 915.5 9.

Trade executed according to plan? Yes

March 10, 2006

Today’s Trade Management:
a. Check the price at 8:46am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped down, do nothing initially. Close the position after 10:30am at market price.
ii. Option 2: If the price opens flat, higher or lower then previous day’s close, put a sell stop order at 904.5, 1 tick below recent low.
iii. Option 4: If the price opens gapped-up, put my sell stop 1 tick below the mid-point of previous day’s bar at 912.5
c. 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. When your initial stop order is triggered
iv. When the projected target is hit
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 908.5, 1 tick below the entry day’s low, if the price beaks 920.
ii. 912.5, 1 tick below the mid-point of the entry day’s bar, if the price breaks 922.5.
iii. 916.5, 1 tick below the entry day’s high, if the price breaks 929.

Adding more contracts
a. Add one contract if the price opens gapped-down during the up-trend using Oops! Buy strategy and the 1st contract is profitable.

Actual Trade Management

a. I called Apex at 8:46am to put in my stop. I did not tighten my stop. I still put it at 904.5. I am worried for a rebound to hit my lower stop pre-maturely.
b. The price opened flat at 916 and moved up to hit 918 but the sellers came in to sell as there are resistance of 916.5 (March Resistance) and 919 on the spot month contract.
c. The price hit 918 and came down to 914 before closing at 915.
d. This forms a shooting star formation spot, next and CI. It looked very bearish.
e. I was thinking to close my position if DJIA closes with big gain.

Trade executed according to plan? Yes

March 13, 2006
Today’s Trade Management:
a. Check the price at 8:46am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped down, do nothing initially. Close the position after 10:30am at market price.
ii. Option 2: If the price opens flat, higher or lower then previous day’s close, put a sell stop order at 908.5, 1 tick below recent low.
iii. Option 4: If the price opens gapped-up, put my sell stop 1 tick below the mid-point of entry day’s bar at 912.5
c. 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. When your initial stop order is triggered
iv. When the projected target is hit
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 908.5, 1 tick below the entry day’s low, if the price beaks 920.
ii. 912.5, 1 tick below the mid-point of the entry day’s bar, if the price breaks 922.5.
iii. 916.5, 1 tick below the entry day’s high, if the price breaks 929.

Adding more contracts
a. Add one contract if the price opens gapped-down during the up-trend using Oops! Buy strategy and the 1st contract is profitable.

Actual Trade Management
a. The DJIA closed 104 points up. The price will open higher.
b. I have 2 options:
i. Close the position at the Open
ii. Let the market decide and put my stop at 908.5
c. Joann of Apex called at the open. The price open higher at 918 and hit 918.5. I immediately put a sell stop at 904.5I
d. did not tighten my stop. I still put it at 904.5. I am worried for a rebound to hit my lower stop pre-maturely.
e. The price then hit 919.5 but moved down.
f. The price then moved side-way at 916 and 917.
g. CI moved down before closing. This caused the price to break 916 and moved to hit low of 913.5.
h. The price closed at 914.5
i. I did not sell as I am waiting for bigger gain.

Trade executed according to plan? Yes

March 14, 2006
Today’s Trade Management:
a. Check the price at 8:46am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped down, do nothing initially. Close the position after 10:30am at market price.
ii. Option 2: If the price opens flat, higher or lower then previous day’s close, put a sell stop order at 908.5, 1 tick below recent low.
iii. Option 4: If the price opens gapped-up, put my sell stop 1 tick below the mid-point of entry day’s bar at 912.5
c. 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. When your initial stop order is triggered
iv. When the projected target is hit
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 908.5, 1 tick below the entry day’s low, if the price beaks 920.
ii. 912.5, 1 tick below the mid-point of the entry day’s bar, if the price breaks 922.5.
iii. 916.5, 1 tick below the entry day’s high, if the price breaks 929.

Adding more contracts
a. Add one contract if the price opens gapped-down during the up-trend using Oops! Buy strategy and the 1st contract is profitable.

Actual Trade Management:
a. The DJIA closed -0.32 points. This should not affect the open a lot.
b. I was outside. I decided to call before market open to put my stop. I put my stop at 907, instead of 908.5. It is safer.
c. I did not receive any call from Apex for the whole day. U know my trade is safe.
d. O checked the price before closing. The price opened lower and closed at the high with higher volume for an inside-day. It is true for Next Month contract and CI.
e. I suspect that the price may move up tomorrow because it is un-usual to have higher volume for inside day.
f. I am wondering whether I should add one more contract for Next Month since it is forming ID-NR4 like CI. Spot month contract has only inside day.
g. I will raise my stop to 908.5 tomorrow.

Trade executed according to plan? No. I put my stop lower. I should raise my stop to 908.5.

March 15, 2006
Today’s Trade Management:
a. Check the price at 8:46am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped down, do nothing initially. Close the position after 10:30am at market price.
ii. Option 2: If the price opens flat, higher or lower then previous day’s close, put a sell stop order at 908.5, 1 tick below the low of recent long white candle.
iii. Option 4: If the price opens gapped-up, put my sell stop 1 tick below the mid-point of entry day’s bar at 912.5
c. 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. When your initial stop order is triggered
iv. When the projected target is hit
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 912.5, 1 tick below the mid-point of the entry day’s bar, if the price breaks 920.
ii. 913, 1 tick below the recent low, if the price breaks 926.

Adding more contracts only if the 1st contract or all contracts is profitable. The following are the available options:
a. Add one contract if the price opens gapped using Oops! Buy or Sell strategy
b. Add one contract if the price breaks out of ID-NR4 formation in the direction of the trade using ID-NR4 strategy.
c. Add one contract if the price breaks a trend-line in the direction of the trade using trend-line breakout strategy.

Actual Trade Management:
a. The DJIA closed +78 points. This price will open gapped-up.
b. Joann of Apex called to inform that the price opened gapped-up at 919.5. I immediately moved up my stop to 912.5 according to my plan.
c. The price then moved up to 921 before CI opened. 921 is the down-trend line resistance.
d. The price then moved up 922 after CI gained around 2 points.
e. Most crowds think that it will go higher as the price broke 921. However, the price moved down to 920 at noon due to lack of players.
f. I was tempted to long April contract as it looked attractive as the ID-NR4 breakout. But due to gapped-up breakout, I decided to wait for MOC for entry if the price remains gapped-up.
g. The price then moved down to touched 918.5, previous day high. There is weakness and lack of players.
h. CI moved down to negative territory. This forced the price to hit 916.5 as the players who went long in the morning covered.
i. Luckily, I did not add new contract. This is because I have trade management rules.

Trade executed according to plan? Yes

March 16, 2006
Today’s Trade Management:
a. Check the price at 8:46am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
iv. Option 1: If the price opens gapped down, do nothing initially. Close the position after 10:30am at market price.
v. Option 2: If the price opens flat, higher or lower then previous day’s close, put a sell stop order at 912.5, 1 tick below the mid-point of the entry day’s long bar and break-even bar.
vi. Option 4: If the price opens gapped-up, put my sell stop 1 tick below the mid-point of entry day’s bar at 912.5, 1 tick below the mid-point of the entry day’s long bar and break-even bar.
c. 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. When your initial stop order is triggered
iv. When the projected target is hit
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 912.5, 1 tick below the mid-point of the entry day’s bar, if the price breaks 920.
ii. 913, 1 tick below the recent low, if the price breaks 926.
iii. 916, if the price breaks 929.

Adding more contracts only if the 1st contract or all contracts is profitable. The following are the available options:
a. Add one contract if the price opens gapped using Oops! Buy or Sell strategy
b. Add one contract if the price breaks out of ID-NR4 formation in the direction of the trade using ID-NR4 strategy.
c. Add one contract if the price breaks a trend-line in the direction of the trade using trend-line breakout strategy.
d. Since March contract is mid way through, I will add 1 more contract for April contract of permitted.

Actual Trade Management:
a. The DJIA closed +58 points. This price will open higher.
b. I called Apex to check the Open at 8:46am. The price opened higher at 917.5. I immediately moved up my stop to 912.5 according to my plan.
c. The price then moved up to 918.5 before CI opened.
d. The price then moved side-way at 918 and 917 even CI moved higher.
e. The price moved lower after CI moved lower.
f. It hit 915 low but the volume is very thin.
g. It then moved up to 916.5 before closing at 915.5.
h. I felt regretted for not taking the profit after the price opened gapped-up yesterday. I could take the profit at the trend line resistance of 921.
i. I may be wrong or right but the market is always right.
j. It is hard to accept loss in this trade after so many days. I just can follow the trade management rules to win. Money is secondary.

Trade executed according to plan? Yes

March 17, 2006
Today’s Trade Management:
a. Check the price at 8:46am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped down, do nothing initially. Close the position after 10:30am at market price.
ii. Option 2: If the price opens flat, higher or lower then previous day’s close, put a sell stop order at 912.5, 1 tick below the mid-point of the entry day’s long bar and break-even bar.
iii. Option 4: If the price opens gapped-up, put my sell stop 1 tick below the mid-point of entry day’s bar at 912.5, 1 tick below the mid-point of the entry day’s long bar and break-even bar.
c. 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. When your initial stop order is triggered
iv. When the projected target is hit
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 912.5, 1 tick below the mid-point of the entry day’s bar, if the price breaks 920.
ii. 913, 1 tick below the recent low, if the price breaks 926.
iii. 916, if the price breaks 929.

Adding more contracts only if the 1st contract or all contracts is profitable. The following are the available options:
a. Add one contract if the price opens gapped using Oops! Buy or Sell strategy
b. Add one contract if the price breaks out of ID-NR4 formation in the direction of the trade using ID-NR4 strategy.
c. Add one contract if the price breaks a trend-line in the direction of the trade using trend-line breakout strategy.
d. Since March contract is mid way through, I will add 1 more contract for April contract of permitted.

Actual Trade Management:
a. The DJIA closed +43 points. This price will open higher.
b. I called Apex to check the Open at 8:46am. The price opened higher at 916. I immediately moved up my stop to 912.5 according to my plan.
c. The price then moved up to 915 before CI opened.
d. The price then moved side-way at 916 and 918 even CI moved higher.
e. The price moved lower after CI moved lower.
f. It hit 919 high but the volume is very thin.
g. It then moved down to 917 before closing at 917.5.
h. I felt regretted for not taking the profit after the price opened gapped-up 2 days ago. I could take the profit at the trend line resistance of 921. The 1st test of trend-line usually will fail.
i. I decided to close my position because:
i. The price is moving side-way.
ii. The price broke a minor up-trend line. It was moving side-way.
iii. The price moved higher with low volume

Trade executed according to plan? Yes


What are my exit options:
- Exit at the day the price opened gapped up at 919.5
- Exit at the day the price opened gapped up and tested the down-trend line resistance of 921.
- Exit when the stop is hit at 912.5. It is too uncertain.

What I have done best:
a. I follow ID-NR4 entry rules with trend-line, Fibonacci retracement and Elliot wave support.
b. I do not hesitate to put stop even the price was quite close at the open on Mar 17 06.
c. I do not let a profitable position turn to a loss.
What I need to improve:
I need plan ahead and know the support and resistance line.

What I have learned:
The 1st test of trend-line usually will fail. It is more reliable if the price gaps.

Weekly Motivation - Time Tested Classic Trading Rules - Part 4

Time Tested Classic Trading Rules for the Modern Trader to Live (31 to 40 of 50)

This is a list of classic trading rules that was given to me while on the trading floor in 1984. A senior trader collected these rules from classic trading literature throughout the twentieth century. They obviously withstand the age-old test of time. I'm sure most everybody knows these truisms in their hearts, but this list is nicely edited and makes a good read.

31. One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity always lies through the open door.
32. The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this he is safe. When he ignores this, he is lost and doomed.
33. It's much easier to put on a trade than to take it off.
34. If a market doesn't do what you think it should do, get out.
35. Beware of large positions that can control your emotions. Don't be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts.
36. Never add to a losing position.
37.Beware of trying to pick tops or bottoms.
38. You must believe in yourself and your judgment if you expect to make a living at this game.
39. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be - up or down.
40. A loss never bothers me after I take it. I forget it overnight. But being wrong and not taking the loss - that is what does the damage to the pocket book and to the soul.

By Linda Bradford Raschke

FCPO May 2006 – Bullish Reversal & Bearish Divergence Trade 2 – Closed with Net Gain of RM765

Trade Planning and Management

FCPO 3rd March Chart as at Feb 28 2006

Date Contract Open High Low Close
Feb 28 06 May 06 1506 1518 1503 1507
Feb 28 06 Jun 06 1516 1522 1508 1512

Reason for Entry
- There is an evening shooting star with blow-off volume of 7445 after a long white candle with blow-off volume of 7071.
- The shorts covered and the longs go in after the price broke 1500
- There is a bearish divergence with price hit new high but %K is lower then the recent high.
- The price formed a descending triangle for the last intra-day session.
- The price felt to hit the up-trend line with low volume and rebounded.
- The price may open higher or gapped-up as CBOT Soy Oil May gained 60 points overnight.

March 1, 2005

Entry Strategy for Bullish Reversal:
a. Option 1: If the price opens gapped up, do nothing
b. Option 2: If the price opens flat or lower than prior day’s low, put a sell stop at 1511, 4 points above the previous close.
c. Option 3: If the price opens higher, sell at market open
d. Option 4: If the price opens gapped down, do nothing.
Adding more contracts
a. No.

Trailing Stops
a. If the stop order is triggered, put a stop order as the initial trailing stop at 1420 or 10 –tick stop loss.

Exits
a. When your initial stop order is triggered
b. Exit on MOC if the price closed higher than your sell price.
c. When the projected Bullish Reversal target of 1447 is hit.
d. Let the trailing buy stop follow the price until it is taken out.

Today’s Entry strategy:
a. Call Apex at 10:27am to get the pre-quote. If Soy oil closes higher, instruct Apex to sell at Open if the price opens higher.
b. Call Apex at 10:30am to check the opening price. Put in your sell stop order if the price opens lower or flat.
c. If the stop order is triggered, put a buy stop order at 1520 or 10-tick stop loss.
d. Exit on MOC if the price closed higher than your sell price.

My actual Entry strategy:
a. I called Apex at 10:25am to check the pre-quote. The pre-open match is 1510, 3 ticks higher than previous day’s close.
b. I informed Joanne that I would like to sell at the open according to my plan. Joann informed me that she will call me when CPO opens. I agreed.
c. Joann called to informed me the open is 1510. The quote is sell at 1511 and buy at 1510.
d. I immediately put in a sell order at 1511. It is done instantly.
e. After minutes later and after seeing the price dropping to 1518, I called to put my buy stop at 1521, 10 ticks above my sell price.
f. I knew that the price will rebound. That’s why I put my stop far from the rebound. I was tempted to put my buy stop at 1512, 1 tick above the intra-day high.
g. The price hit 1503, the previous day’s low, and rebounded. The price formed ascending triangle breakout to hit 1514. This has caught some of the short-term traders.
h. The price then moved down to hit1507 and closed for the morning session at 1509.
i. The price then moved at the range of 1509 and 1507. Then the supply came after 3:30pm to sell down to 1500. It did hit the low of 1497 before rebounding to 1504 as 1500 is the strong support. Most players have liked to buy at round number of 1500.
j. I know that the price will move back above 1500 the next day. I will however tighten my stop to 1519, 1 tick above the recent high.

Trade executed according to plan? Yes and well executed.

March 2, 2005
Today’s Trade Management:
a. Check the price at 10:30am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped up, close the position at the previous day’s high.
ii. Option 2: If the price opens flat or lower than prior day’s low, put a sell stop at 1519, one tick above recent high.
iii. Option 3: If the price opens higher, one tick above recent high.
iv. Option 4: If the price opens gapped-down, put my stop ay 1519, one tick above recent high or 1 tick above the mid-point of previous day bar if the bar is more than 12 points in length.

c. 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. When your initial stop order is triggered
iv. When the projected Bullish Reversal target of 1447 is hit.
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 1515, if the price breaks 1497, the previous day’s low.
ii. 1506, 1 tick above the mid-point of the entry day bar, if the price breaks 1483.
iii. 1501, if the price breaks 1472, one of the previous day’s low.

Adding more contracts
a. Add one contract if the price opens gapped-up during the down-trend using Oops! Sell strategy.

Actual Entry strategy:
a. I called Apex at 10:32:25am to put in my stop. I did not tighten my stop. I still put it at 1520-level. I am worried for a rebound to hit my lower stoip pre-maturely.
b. The price opened flat at 1500 and moved down to 1493 and moved higher to 1495 for the morning session in a quiet session.
c. In the afternoon, the price moved to hit 1497 and moved back to 1494 and 1495 level for the rest of the afternoon session
d. At 17:55pm, there is a heavy selling to push the price to close at 1490 at the low.
e. I will tighten my stop tomorrow at 1419.

Trade executed according to plan? No. A bit different. I want to make sure my stop is far from being stopped out pre-maturely.

March 3, 2005
Today’s Trade Management:
a. Check the price at 10:30am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped up, close the position at the previous day’s high.
ii. Option 2: If the price opens flat or lower than prior day’s low, put a sell stop at 1519, one tick above recent high.
iii. Option 3: If the price opens higher, one tick above recent high.
iv. Option 4: If the price opens gapped-down, put my stop ay 1519, one tick above recent high or 1 tick above the mid-point of previous day bar if the bar is more than 12 points in length.

c. 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. When your initial stop order is triggered
iv. When the projected Bullish Reversal target of 1447 is hit.
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% or 61.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 1515, if the price breaks 1497, the previous day’s low.
ii. 1506, 1 tick above the mid-point of the entry day bar, if the price breaks 1483.
iii. 1501, if the price breaks 1472, one of the previous day’s low.

Adding more contracts
a. Add one contract if the price opens gapped-up during the down-trend using Oops! Sell strategy.

Actual Entry strategy:
a. I called Apex at 10:32am to put in my stop. I tightened my stop at 1519, 1 tick above recent high.
b. The price opened higher at 1498 and hit high of 1502 before moving down to 1493. It moved between 1494 and 1495 for the rest of the morning.
c. The price then moved side-way between 1494 and 1495.
d. The price then moved down a few minutes before closing to close at 1488 after hitting 1487 with higher volume.

Trade executed according to plan? Yes

March 6 2005
Today’s Trade Management:
a. Check the price at 10:30am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped up, put a sell stop at 1519, one tick above recent high.
ii. Option 2: If the price opens flat or lower than prior day’s low, put a sell stop at 1519, one tick above recent high.
iii. Option 3: If the price opens higher, put a sell stop at 1519, one tick above recent high.
iv. Option 4: If the price opens gapped-down, put my stop ay 1519, one tick above recent high or 1 tick above the mid-point of previous day bar if the bar is more than 12 points in length.

c. 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. When your initial stop order is triggered
iv. When the projected Bullish Reversal target of 1447 is hit.
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% or 61.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 1515, if the price breaks 1497, the previous day’s low.
ii. 1506, 1 tick above the mid-point of the entry day bar, if the price breaks 1483.
iii. 1501, if the price breaks 1472, one of the previous day’s low.

Adding more contracts
a. Add one contract if the price opens gapped-up during the down-trend using Oops! Sell strategy.

Actual Entry strategy:
a. I called Apex at 10:32am to put in my stop. I put my stop at 1519, 1 tick above recent high.
b. The price opened flat at 1488 and is moving down to 1484 for the morning session
c. The price then moved side-way between 1484 and 1495.
d. The price then moved down a few minutes before closing to close at 1474 with lower volume.
e. I need to tighten my stop tomorrow.

Trade executed according to plan? Yes

March 7 2005
Today’s Trade Management:
a. Check the price at 10:30am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped up, put a sell stop at 1515, one tick above recent high.
ii. Option 2: If the price opens flat or lower than prior day’s low, put a sell stop at 1515, one tick above recent high.
iii. Option 3: If the price opens higher, put a sell stop at 1515, one tick above recent high.
iv. Option 4: If the price opens gapped-down, put my stop ay 1515, one tick above recent high or 1 tick above the mid-point of previous day bar if the bar is more than 12 points in length.

c. 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. When your initial stop order is triggered
iv. When the projected Bullish Reversal target of 1447 is hit.
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% or 61.8% as a target if it is trend-following Oops!
d. Subsequent Trailing Stop:
i. 1515, if the price breaks 1497, the previous day’s low.
ii. 1506, 1 tick above the mid-point of the entry day bar, if the price breaks 1483.
iii. 1501, if the price breaks 1472, one of the previous day’s low.

Adding more contracts
a. Add one contract if the price opens gapped-up during the down-trend using Oops! Sell strategy.

Actual Entry strategy:
a. Joann of Apex called at 10:30 to inform that FCPO May opened at 1475. I almost forgot to put my stop.
b. I called Apex at 10:45am to put my stop at 1515, 1 tick above the entry’s day high
c. The price then moved up to 1481 and stayed at 1478 in the morning.
d. The critical up-trend line has been broken. There should be some profit taking.
e. The price then hit 1471 low and hit 1483 high before closing at 1472.
f. It is a whipsaw day.
g. I will lower my stop to break-even point of 1508 tomorrow.
h. I did not lower my stop so much as I expect a rebound and sell-down again.

Trade executed according to plan? Yes

March 8 2005
Today’s Trade Management:
a. Check the price at 10:30am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped up, put a sell stop at 1505, 1 tick above the high of the day after the entry day.
ii. Option 2: If the price opens flat or lower than prior day’s low, put a sell stop at 1505, 1 tick above the high of the day after the entry day.
iii. Option 3: If the price opens higher, put a sell stop at 1505, 1 tick above the high of the day after the entry day.
iv. Option 4: If the price opens gapped-down, put my stop at 1505, 1 tick above the high of the day after the entry day.
c. 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. When your initial stop order is triggered
iv. When the projected Bullish Reversal target of 1447 is hit.
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% or 61.8% as a target if it is trend-following Oops! It is 1438 based on 1518 and 1380.
d. Subsequent Trailing Stop:
i. 1508, the breakeven-point.
ii. 1506, 1 tick above the mid-point of the entry day bar, if the price breaks 1483.
iii. 1501, if the price breaks 1472, one of the previous day’s low.

Adding more contracts
a. Add one contract if the price opens gapped-up during the down-trend using Oops! Sell strategy.

Actual Entry strategy:
a. I have the following data to ask me close my position:
i. If the price broke 1467, there are sellers coming in. I would take profit because the breakdown on the 1st occasion is usually the failed one in FCPO.
ii. 10th of March is coming. It is also Friday. This is the day where the export and production figures will announce.
iii. I may the fund.
iv. I may have a FKLI trade tomorrow.
v. The OI for May contract is decreasing in a bear market.

b. Joann of Apex called at 10:30 to inform that FCPO May opened gapped-down at 1469. It hit low of 1464 and now is 1470. I immediately put my buy stop order at 1505, 1 tick above the high of the day after the entry day.
c. I wanted to take profit at 1467 or below but the price did not hit it.
d. The price then moved up to 1472 and hit high of 1475 before moving down to 1472 during noon.
e. The price then moved down in the quiet afternoon.
f. It then moved to hit 1467 before closing at 1469.
g. I did not take profit because those reasons are not real. I should take profit based on charts without emotions. I may not be right but I should follow the chart for profit taking.

Trade executed according to plan? Yes based on chart. No based on market information and intuition.

March 9 2005
Today’s Trade Management:
a. Check the price at 10:30am for the open and put in the protective buy stop order.
b. Initial Trailing Stop:
i. Option 1: If the price opens gapped up, put a sell stop at 1505, 1 tick above the high of the day after the entry day.
ii. Option 2: If the price opens flat or lower than prior day’s low, put a sell stop at 1505, 1 tick above the high of the day after the entry day.
iii. Option 3: If the price opens higher, put a sell stop at 1505, 1 tick above the high of the day after the entry day.
iv. Option 4: If the price opens gapped-down, put my stop at 1505, 1 tick above the high of the day after the entry day.
c. 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. When your initial stop order is triggered
iv. When the projected Bullish Reversal target of 1447 is hit.
v. Let the trailing buy or sell stop follow the price until it is taken out (if there is a down-trend)
vi. Use Fibonacci 161.8% or 61.8% as a target if it is trend-following Oops! It is 1438 based on 1518 and 1380.
d. Subsequent Trailing Stop:
i. 1508, the breakeven-point.
ii. 1506, 1 tick above the mid-point of the entry day bar, if the price breaks 1483.
iii. 1505, 1 tick above the high of the day after the entry day.
iv. 1501, if the price breaks 1472, one of the previous day’s low.

Adding more contracts
b. Add one contract if the price opens gapped-up during the down-trend using Oops! Sell strategy.

Actual Entry strategy:
a. I called Apex at 10:29am to check the pre-quote. It is matched at 1470 even Soy Oil was down 36 points.
b. The price opened at 1471 and moved up to 1474.
c. It then broke 1475 before 11am to hit 1478.
d. I decided to close the position at market price because:
i. The price moved according to the morning star movement.
ii. Tomorrow is Friday and 10th of the month e\export and production figure release.
iii. The OI is decreasing as the bear is starting to take profit.
e. It is done at 1478.
f. The price then moved down to hit 1472 and closed at 1474 for the morning session with higher volume of 1200
g. The price then moved down in the afternoon to hit 1468. It then moved side-way at 1468 and 1471.
h. It then moved down to 1464 and closed at 1464 with high volume.

Trade executed according to plan? Yes based on chart.

What are my exit options:

a. I should have exited yesterday when the price opened gapped-down because of the following data and my intuition:
i. If the price broke 1467, there are sellers coming in. I would take profit because the breakdown on the 1st occasion is usually the failed one in FCPO.
ii. 10th of March is coming. It is also Friday. This is the day where the export and production figures will announce.
iii. I may the fund.
iv. I may have a FKLI trade tomorrow.
v. The OI for May contract is decreasing in a bear market.

Since the Soy oil closed 48 points down, the open may gap down. I can check the pre-quote to know whether the price will open gapped-down

I have two options to exit:
· Exit at the open price or market price
· Exit at the price 2 ticks below the open at 1467
· Exit at the price 1 tick below the current strong support at 1466. Most crowds will short below 1466.
b. I should exit after 11:30am to day based on morning star setup. However, I may loss more profit if the price keeps shooting up.

c. I should exit based on my trailing stop loss point at 1501

What I have done best:
a. I follow the bullish reversal and bearish divergence trade signal.
b. I executed the trade as plan with all the market information leading to the reversal.
c. I did my best to putting my stop away from the price.

What I need to improve:
a. I must less monitor the price.
b. I should not monitor the price in the 1st hour after the market starts.

What I have learned:
I have to wait for the trade to come. Waiting is part of trading.
I learned something in every breakout. This time:
i. If the trend is up, there is a tendency for it to continue until something changes.
ii. Initial correction of a trend is healthy. This allows price to move higher.
iii. Initial correction to the up-trend line with low volume will see price rebound and make new high or low. If there is a gap against the trend, trade with the trend with Oops! for new position or adding new contract.
iv. I need to trade on each fractal breakout. I need to go against my emotion on this. I know that I will get it right as the price moves lower and lower or higher and higher.
v. The historical chart pattern may repeat. I will study the historical chart to find any trading opportunity.

Weekly Motivation - Time Tested Classic Trading Rules - Part 3

Time Tested Classic Trading Rules for the Modern Trader to Live (21 to 30 of 50)

This is a list of classic trading rules that was given to me while on the trading floor in 1984. A senior trader collected these rules from classic trading literature throughout the twentieth century. They obviously withstand the age-old test of time. I'm sure most everybody knows these truisms in their hearts, but this list is nicely edited and makes a good read.

21. You must have a program, you must know your program, and you must follow your program.
22. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
23. Split your profits right down the middle and never risk more than 50% of them again in the market.
24. The key to successful trading is knowing yourself and your stress point.
25. The difference between winners and losers isn't so much native ability as it is discipline exercised in avoiding mistakes.
26. In trading as in fencing there are the quick and the dead.
27. Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success.
28. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.
29. Accept failure as a step towards victory.
30. Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don't let ego and greed inhibit clear thinking and hard work.

By Linda Bradford Raschke

FKLI March 2006 – Trade 5 -Oops – Closed with Net Loss of RM200

Trade Planning and Management

FKLI Spot Month Chart as at March 6 2006

March 7, 2006
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

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. Joann of Apex called 8:45am to inform me that there is a gap-down with open at 907.5.
b. I immediately put a buy stop at 908.5.
c. The price was triggered at 909, 1 tick higher than my intended entry price. But it is triggered at 8:50am. It is before CI opened. I knew that this trade is a loser.
d. The price then shot up to 912.5 as CI gained 4.4 points.
e. FKLI closed at 910 at noon.
f. However, the regional markets’ weakness forced CI to move down below 915. This has caused some selling of FKLI.
g. My stop is triggered at 906, 1 tick below my intended stop loss.
h. It is not an Oops! trade with stop order trigged with slippage of 0.5 points.
i. I lost RM200 (RM150 + commission)

Trade executed according to plan? Yes

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

What I need to improve:
a. Should I trade on Tuesday?

What I have learned:
If the stop order is triggered before CI opens, it is usually not a good trade.

Weekly Motivation - Time Tested Classic Trading Rules - Part 2

Time Tested Classic Trading Rules for the Modern Trader to Live (11 to 20 of 50)

This is a list of classic trading rules that was given to me while on the trading floor in 1984. A senior trader collected these rules from classic trading literature throughout the twentieth century. They obviously withstand the age-old test of time. I'm sure most everybody knows these truisms in their hearts, but this list is nicely edited and makes a good read.

11. Limit your losses - use stops!
12. Never cancel a stop loss order after you have placed it!
13. Place the stop at the time you make your trade.
14. Never get into the market because you are anxious because of waiting.
15. Avoid getting in or out of the market too often.
16.Losses make the trader studious - not profits. Take advantage of every loss to improve your knowledge of market action.
17. The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success.
18. Always discipline yourself by following a pre-determined set of rules.
19. Remember that a bear market will give back in one month what a bull market has taken three months to build.
20 Don't ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.

By Linda Bradford Raschke

FKLI March 2006 – Trade 4: Oops – Closed with Net Gain RM100

Trade Planning and Management

Next Month Chart as at February 22 2006

Date Contract Open High Low Close
Feb 22 06 Feb 06 926.5 926.5 921.5 922.5
Feb 22 06 Mar 06 924.5 924.5 918.0 918.0

February 23, 2006
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. Add ONE additional contract one tick above the major support and resistance at 932 on the Next month chart.
b. Add ONE additional contract one tick above the major support and resistance at 935 on the Spot month chart.

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 at 8:47am to check the Open. The price opened higher on February contract but gapped down on March Contract at 917.5. I did not put my buy stop order. This is because:
i. Oops may not work on Thursday.
ii. The Feb. contract does not open gapped-down. It may not gap as it is going to expire and tend to move closer to CI.
iii. There is a possibility of whipsaw after recent whipsaw day.

b. After coming home at around 10:47am, I looked the price. It looked attractive because:
i. The risk is only RM150 (RM100 plus commission). The risk has to be small to be attractive
ii. 918.5 is an attractive buy price because it is near the support of 916.5.
iii. There is a possible of ascending triangle formation on the intra-day chart with projected high of 914 from 920.5 with the height of 3.5 points.
iv. There is a very bearish news come out. Bank Negara raised the overnight policy rate (OPR) by 25 basis points to 3.25% on Feb 22, the second rate increase since November, due to concerns about inflationary pressures as the economy grew 5.3% in 2005. It is bearish news but the price has factored in the news already.
c. At 10:50am, I put in a buy order at 918.5, 1 tick above the low of the previous day.
d. My order is triggered at 918.5 at 10:55am. I immediately put a sell stop order at 916.5.
e. The price moved around 918.5 and 919 area before hitting the intra-day high of 920.5 at noon close.
f. The price moved up in the afternoon session to hit 922.5 high and retrace. But it closed at the high

Trade executed according to plan? No with some discretions above.

February 24, 2006
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, do nothing initially. Close your position after 10:30am if the price stays gapped down.
ii. If the price opens gapped up, move your stop to 919.5, the breakeven point, or close the position immediately. Oops! is most powerful this time when there is a price-extreme
iii. If the price opens higher, flat or lower, put your sell stop order at 916.5, 1 tick below the previous day’s low.
c. 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!
d. Subsequent Trailing Stop:
i. 919,5, the breakeven point
ii. 920.5, if the price breaks 924.5.
iii. 922, 1 tick below previous day’s high, if the price breaks 929.

My actual trade management:
a. I called Apex at 8:30am to check the OI of FKLI and FCPO.
b. I called again to check the open. The price of Feb and Mar contract opened at 925 and 922.5 respectively.
c. I immediately put a sell stop at 916.5.
d. The price of March contract hit 924. The price then move around 922.5 and 923.5 for the rest of the morning.
e. The price then hit 925 in the afternoon and then moved down to hit the low of 921.5 before closing at 923.
f. It is a whipsaw day.

Trade executed according to plan? Yes

February 27, 2006
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, do nothing initially. Close your position after 10:30am if the price stays gapped down.
ii. If the price opens gapped-up move your stop to 921, 1 tick below the previous day’s low, or close the position immediately. Oops! is most powerful this time when there is a price-extreme
iii. If the price opens higher, flat or lower, put your sell stop order at 920.5, 2 ticks below the previous day’s low.
c. 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!
d. Subsequent Trailing Stop:
i. 921, 1 tick below the previous day’s low.
ii. 924.5, if the price breaks 929.
iii. 928.5, 1 tick below the recent high, if the price breaks 931.5.

My actual trade management:
I called Apex at 8:47 to check the open. The price of Feb and Mar contract opened higher at 927 and 925 respectively. I immediately put a sell stop at 920.5, 2 ticks below the previous day’s low.
The price of March contract hit 926. It then retraced to 924 before moving side-way of 925 and 926 range for the whole morning.
I was a bit concerned about the position because the price closed with white evening shooting star doji. However, the price broke previous day’s high of 925 to hit 926.
The price moved higher in the afternoon as regional markets are up with STI hit 6-year high.
The price then broke 926 with the ascending triangle formation with target of 928. After the breakout, the price remained between 927 and 927.5.
It is a good idea to add more contracts at 926.5. However, it is still within the trading range. I did not do so.
I then decided to put a buy stop order at 932 for March contract.
The price hit 928 before closing at 927.5 with roll-over slowing down.

Trade executed according to plan? Yes

February 28, 2006
Today’s Trade Management:
a. Call Apex at 8:45am to check the opening price, put in a protective sell stop order and a buy stop order at 932.
b. Initial Trailing Stop:
i. If the price opens gaps down, do nothing initially. Close your position after 10:30am if the price stays gapped down.
ii. If the price opens gapped-up move your stop to 923.5, 1 tick below the previous day’s low, or close the position immediately. Oops! is most powerful this time when there is a price-extreme
iii. If the price opens higher, flat or lower, put your sell stop order at 920.5, 3 ticks below the previous day’s low.
c. 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!
d. Subsequent Trailing Stop:
i. 924.5, if the price breaks 929.
ii. 928.5, 1 tick below the recent high, if the price breaks 931.5.

My actual trade management:
I called Apex at 8:46 to check the open. The price of Feb opened slightly lower at 928. The Mar contract opened lower at 924.5. I immediately put a sell stop at 920.5, 2 ticks below the previous 2nd day’s low.
The price of March contract hit 927.5. It then retraced to 924 before moving side-way of 924 and 925.56 range for the whole morning.
CI opened higher and moved lower. The effect of petrol price hike and BLR rise do not cause the FKLI to fall even CI dropped a few points.
The price then moved lower to hit 923.5 for March contract but moved up to 924 and 925 ranges.
At 4:37pm, the price suddenly moved up toi 927 as CI is moving up as well.
It hit 928 high before closing at 927.

Trade executed according to plan? Yes

March 1, 2006
Today’s Trade Management:
a. Call Apex at 8:45am to check the opening price, put in a protective sell stop order and a buy stop order at 932.
b. Initial Trailing Stop:
i. If the price opens gaps down, do nothing initially. Close your position after 10:30am if the price stays gapped down.
ii. If the price opens gapped-up move your stop to 923.5, 1 tick below the previous day’s low, or close the position immediately. Oops! is most powerful this time when there is a price-extreme
iii. If the price opens higher, flat or lower, put your sell stop order at 921, 3 ticks below the previous 3rd day’s low.
c. 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!
d. Subsequent Trailing Stop:
i. 923, if the price breaks 929.
ii. 928.5, 1 tick below the recent high, if the price breaks 931.5.

My actual trade management:
a. Apex called me about the open. Joanne informed me that the March contract opened at 925. This means the price opened lower on March contract and gapped-down based on Spot month chart.
b. I Clled back later to put my stop at 921, 1 tick below the previous 4th day low.
c. CI opened lower and moved down. This caused FKLI to move down as well.
d. The price actually opened at 925.5. No gap.
e. The price hit 923 and rebounded to 924.,5 before moving down to hit 922.5
f. I checked the Spot month chart; the price broke a minor up-trend line. CI broke the recent low of 922.5.
g. The price then hit 921,5 at 10:11am. I decided to close the position because:
i. The price broke a minor up-trend line.
ii. CI also moved down.
iii. I will have a position in CPO. Since this position is moving against me now. Get out.
h: I made RM100 net (RM150 [3 points] - commission of RM50)

Trade executed according to plan? Yes

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

What I need to improve:
a. Do I give back too many points? Yes and No.
b. I may not want to trade a side-way market and chase any minor trend.

What I have learned:
a. I should not trade in the side-way market because:
i. I need to monitor everyday during the side-way period. It is tiring.
ii. There are a lot of whipsaws in side-way market.
b. It is better to wait for breakout to trade.