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.