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.