FKLI April 2006 – Ascending Triangle Trade 7 – Closed with a Net Gain of RM325

Trade Setup Details
Entry Price: Buy stop order: 918 (Max. slippage 3 ticks from orig. entry price)
Number of Units / Contracts: Long 1 Contract
Profit Objective: 934 (34 points) (1 tick below the resistance. Do not use round number or tens)
Protective Stop for Buy stop order: 913, 5-piont risk (1 tick below intra-day’s low. Do not use round number or tens)
Risk Reward Ratio: 3.4:1
% of Capital (1% to 5% of your total capital, prefer 2%) <10% (RM250/2785). One tick is RM50.
Duration 1 – 10 days
Market Info
- The price is moving in a side-way market which looks like Ascending Triangle Setup
- The price hit the major trend-line and moves up
- The price hit the Fibonacci retracement levels
- There price is near 200-SMA- The price is still at the higher low of an up-trend.
Avoid: Long or Short on no breakout
Do you have the edge? Yes. Wait for price confirmation
Are the odds in your favor? Yes.


Trade Management
March 24, 2006

Entry Strategy for AT stop order
a. Option 1: If the price opens gaps up from prior day’s low, put a buy stop at 918 after FKLI opens.
b. Option 2: If the price opens flat or lower than prior day’s low, put a buy stop at 918 after FKLI opens.
c. Option 3: If the price opens gapped down, put a buy stop at 918 after FFKLI opens.

Adding more contracts
Place a buy stop order at 918 (based on Next Month chart)
· re-entry if you miss the buy stop orders above
· or additional contracts to maximize profits
Place a sell stop order at 914

Place a buy stop order at 922.5 (based on Next Month chart) as
· re-entry if you miss the buy stop orders above
· or additional contracts to maximize profits
Place a sell stop order at 917.5.

Place a buy stop order at 928.5 (based on Next Month chart) as
· re-entry if you miss the buy stop orders above
· or additional contracts to maximize profits
Place a sell stop order at 923.5.

Trailing Stops
a. If the stop order is triggered, put a stop order as the initial trailing stop at 913, 5-point stop loss.

Exits
a. When your initial stop order is triggered
b. Exit on MOC if the price closed below 918.
c. When the projected AT target of 934 or 937 is hit.
d. Let the trailing buy stop follow the price until it is taken out.

Re-entry
The reason for re-entry is that the previous trade was stopped out but the trend is intact. There are several re-entry options:
Enter at the last entry point again after a fractal is formed.
Enter at 1 tick above the fractal after a fractal is formed.
Enter at MOC when the price closes near the high of a long white candle with higher volume.

Today’s Entry strategy:
a. The DJIA lost 4Call Apex at 10:30am to check the opening price. Put in your buy stop ay 918. Ask them to inform you when any trade is done.
b. If the stop order is triggered, put a sell stop order at 914, 1 tick below the prior day’s low. My risk is only 4 points.
c. If this is a first-time ascending triangle breakout, exit on MOC (5:55pm) if the price is less than 3 points from 918 or my stop is being triggered
d. If it is a second ascending triangle breakout, there is no MOC exit unless the stop is triggered.

My actual Entry strategy:
a. DJIA lost 47 points. This allows me to put in my buy stop.
b. I planned the trade well. I have planned to pyramid for this trade to test my strategy.
c. At 8:46am, I called Apex to put in my buy stop at 918.
d. My stop was triggered at 8:53am. I immediately put my sell stop at 914. I also put additional buy stop at 922.5 based on spot month’s entry to pyramid.
e. The price then moved up to 921.5 high and stayed in the range of 920.
f. The price then hit 921.5 at noon closing.
g. The price then moved down after CI is moving down.
h. However, the price did not move down below 919.5.
i. The price then moved up even CI only gained 0.98 points. It hit the high of 922, 1 tick below another buy stop.

Trade executed according to plan? Yes
What are my entry options:
Buy at the breakout ID-NR4 and the breakout of down-trend line.
i. Put a buy stop at 914.5 before FKLI opens.
ii. If the buy stop is triggered, put a sell stop at 911.5. The risk is only RM200 (3 points + RM50 commission)
Buy at MOC if the ID-NR4 Breakout closes above the breakout point.
i. Buy at 916.5 at MOC. This is safer as the higher closing confirms of breakout of ID-NR4 and down-trend line
Buy at the breakout of 918.
i. Put a buy stop before FKLI opens.
ii. If the buy stop is triggered, put a sell stop at 914. The risk is RM250 (4 points + commission). This is the safest bet

The best entry is (b) above as this confirms the breakout of downtrend line.


March 27, 2006

Today’s Trade Management:
a. DJIA gained 9.78 points on Friday.
b. Call Apex at 8:43am to check the opening price.
c. Trade Management for Existing contract:
i. If the price opens gapped-down, do nothing initially. Closed the position after 11:30am.
ii. If the price opens gapped-up, put my sell stop at 917.5.
iii. If the price opened lower, flat or higher, put my sell stop order at 914.

d. Trade Management for 2nd contract (New):
i. Check the pre-quote of FKLI March and April at 8:43am.
· If the pre-matched price will open gapped up, buy at the market when FKLI opens.
· If the pre-matched price will open flat or lower, put in a buy stop at 922.5, the Spot Month’s entry price.
ii. If the order is triggered, put a sell stop at 917.5, 5 point loss.

e. Trade Management for 3rd contract (New):
i. Check the pre-quote of FKLI March and April at 8:43am.
· If the pre-matched price will open gapped up, put in a buy stop at 928.5, one tick above the recent 2nd high, after FKLI opens.
· If the pre-matched price will open flat or lower, put in a buy stop at 928.5, one tick above the recent 2nd high, after FKLI opens
ii. If the order is triggered, put a sell stop at 922, 5 point loss.

f. Possible Exits
i. When my stop order is triggered
ii. When the projected AT target of 934 or 937 is hit.
iii. When the price breaks a up-trend line
iv. When the trailing stop is hit.

g. Subsequent Trailing Stops for Existing contract:
i. 914, the initial stop
ii. 917.5, 1 tick below the breakout point, if the price breaks 922.5.
iii. 919.5, the breakeven point, if the price breaks 925.
iv. 921.5, 1 tick below the previous day’s high, if the price breaks 928.
v. If the price stayed above 922.5, put a sell stop at 934, the projected AT target of 934 based on Next month contract.

h. Subsequent Trailing Stops for 1st New contract (if triggered):
i. 917.5, the initial stop
ii. 919.5, if the price breaks 925.
iii. 921.5, 1 tick below the previous day’s high, if the price breaks 928.
iv. If the price stayed above 922.5, put a sell stop at 937, the projected AT target of 937 based on Spot month contract.

i. Subsequent Trailing Stops for 2nd New contract (if triggered):
i. 923.5, the initial stop of 5 points
ii. 927.5, 1 tick below the recent 2nd high, if the price breaks 934.
iii. Trail your stop.

My actual trade management:
a. Joann of Apex called at 8:43am to inform me that the price open 929 or 924.5 for March and April contract respectively.
b. I buy at the market at 925.5 for additional contract. U also put a sell stop at 917.5 for my 1st contract and 920.5 for my second contract.
c. Later, I found that the price open gapped up too much, the short-term long traders may take profit. I also think that I should have rehearsed my entry this morning.
d. What I should have done are:
i. Put a buy stop at 922.5. The price would have been triggered at 924.5
ii. Buy at retracement after 9:30am as the price broke up from consolidation.
e. The price of March hit 929 resitance and come down to 926.5 to come the gap. The April contract moved down to hit 923.5 and moved up to 925.5
f. The CI closed 2.39 points at the high at the last minute push-up. This caused March and April contract to move higher after 5:00pm.
g. The March contract hit high of 932 and closed at 931.5, whereas, the April contracts hit 929.5 and closed at this high.
h. Both the contracts are near the resistance at 934.5 and 931.5. I would expect these resistances to be broken. This will cause short covering and more crowds will long after the breakout. I will take profit after the breakout.

Trade executed according to plan? No. I do not add the third contract because the entry of second contract is quite high and I may not have enough margins.


March 28, 2006
Today’s Trade Management:
a. DJIA lost 29.86 points on Overnight.
b. Call Apex at 8:43am to check the opening price.
c. Trade Management for 1st contract:
i. If the price opens gapped-down, do nothing initially. Closed the position after 11:30am.
ii. If the price opens gapped-up, put my sell stop at 923.
iii. If the price opened lower, flat or higher, put my sell stop order at 923.

d. Trade Management for 2nd contract:
i. If the price opens gapped-down, do nothing initially. Closed the position after 11:30am.
ii. If the price opens gapped-up, put my sell stop at 923.
iii. If the price opened lower, flat or higher, put my sell stop order at 923.


e. Possible Exits
i. When my stop order is triggered
ii. When the projected AT target of 934 or 937 is hit.
iii. When the price breaks a up-trend line
iv. When the trailing stop is hit.

f. Subsequent Trailing Stops for 1st contract:
i. 923, the initial stop
ii. 928, 1 tick below the 2nd recent high, if the price breaks 931.5.
g. Subsequent Trailing Stops for 2nd contract:
i. 923, the initial stop
ii. 928, 1 tick below the 2nd recent high, if the price breaks 931.5.

My actual trade management:
a. Joann of Apex called at 8:43am to inform me that the price open 930 or 928 for March and April contract respectively.
b. I immediately put my sell stop at 923 for the 1st entry contract and 922.5 for the 2nd entry contract.
c. The price moved to hit the prior day’s high and moved down to hit 928. It hit low of 927.5 before lunch.
d. I thought that it is ID-NR4 again and hoped for a gap-down tomorrow so that I could add additional contract for a big move.
e. However, the CI stayed near the resistance of 931.15 for the whole day.
f. The CI closed 4.35 points at the high at the last minute push-up. It broke new high. This caused March and April contract to move higher after 5:00pm.
g. The March contract hit high of 933 and closed at 932.5, whereas, the April contracts hit 930.5 and closed at 930.
h. Both the contracts are near the resistance at 934.5 and 931.5. I would expect these resistances to be broken. This will cause short covering and more crowds will long after the breakout. I will take profit after the breakout.

Trade executed according to plan? Yes


March 29, 2006
Today’s Trade Management:
a. DJIA lost 95.57 points on overnight.
b. Call Apex at 8:43am to check the opening price.
c. Trade Management for 1st contract:
i. If the price opens gapped-down, do nothing initially. Closed the position after 11:30am.
ii. If the price opens gapped-up, put my sell stop at 923.
iii. If the price opened lower, flat or higher, put my sell stop order at 923.

d. Trade Management for 2nd contract:
i. If the price opens gapped-down, do nothing initially. Closed the position after 11:30am.
ii. If the price opens gapped-up, put my sell stop at 926, my breakeven point.
iii. If the price opened lower, flat or higher, put my sell stop order at 923.

e. Possible Exits
i. When my stop order is triggered
ii. When the projected AT target of 934 or 937 is hit.
iii. When the price breaks a up-trend line
iv. When the trailing stop is hit.

f. Subsequent Trailing Stops for 1st contract:
i. 923, the initial stop
ii. 926, if the price breaks 931.5.
iii. 928, 1 tick below the 2nd recent high, if the price breaks 934.5.
g. Subsequent Trailing Stops for 2nd contract:
i. 923, the initial stop.
ii. 926, my breakeven point. If the price breaks 931.5
iii. 928, 1 tick below the 2nd recent high, if the price breaks 931.5.

My actual trade management:
a. I called Apex to check the open. The March contract opened gapped-up at 934 and April contract opened at 929. There is strange.
b. I put in my sell stop for the two contracts at 923..
c. Later, I put in another buy order at 932.
d. I know that I did not follow my plan. But I did it according to the AT breakout rule.
e. At 9:41am, my buy stop order was triggered at 932.5. I put in my sell stop order at 927.5. The price hit 933 before moving down again to 931.5 and 932.5 area.
f. The price moved around this area for the rest of the morning and afternoon. It is not right for a breakout with CI gained 1 to 2 points between 932 and 934 area.
g. At 3:30pm, the price showed weakness and moved down to 931.
h. The price finally broke the intra-day low of 929 to 928.
i. I called Joann of Apex to close all my positions. She cancelled my sell stops and put in 3 sell orders at 928.5.
j. The orders are done. I was relieved.
k. My closed positions are as follows:
i. RM475 (RM525 less RM50 commission)
ii. RM100 (RM150 less commission)
iii. –RM250 (RM200 and RM50 commission)
l. There is a net gain of RM325.
m. When the ship is sinking, do not pray or hope, jump.
n. The price hit 927.5 low and closed at this price. It is bearish.
o. Luckily, I got out earlier. The price hit 921.5 the next day.
p. FKLI is like fencing. There is the quick or the death.

Trade executed according to plan? No. I over-traded. I should just trade 2 contracts first to get the feel of it. I went for the maximum 3 for AT breakout.

My initial and planned exit options:
Sell at MOC when there is a long white candle with blow-off volume and CI gained a lot with volume greater than 1 billion.
Sell when the price opened gapped up again after the long white candle with blow-off volume.
Both the contracts are near the resistance at 934.5 and 931.5. I would expect these resistances to be broken. This will cause short covering and more crowds will long after the breakout. I will take profit after the breakout.
Trail my stop according to chart.

My actual exit options:
Exit all contracts when the price broke the intra-day low. I chose this because if the breakout fails, there will be profit-taking like last time.
Exit the 3rd contracts at 927.5 and 1st and 2nd contract at 923.
Sell al 3 contracts at 932 when the price stayed stagnant in the afternoon.

What I have done best:
a. I plan the trade ahead and have rehearsed the possible scenario.
b. I write my entry and exit options to study and rehearse my trade.
c. I do not predict the market. I trade what I see.

What I need to improve:
a. I need to check the price near MOC around 5:10pm and 5:12pm for open position to know the market behavior near MOC. This is because I missed to enter at MOC as the price closed at 922, 1 tick below my near entry price. I should enter MOC at 922 as the price may open higher or gapped-up the next day.
b. I need to plan my trading plan and follow exactly. This includes the risk and the number of contracts to trade. I cannot the market anyway.

What I have learned:
I will wait the market to take me off or the price hit my target. Sometimes, it does not happen.
If the price closes near or at the close after breakout of consolidation, you may buy at MOC as the price may open higher or gapped-up. This pattern draws crowd in. The following scenario may happen:
i. The price may open higher or gapped up. It is the exits for short-term traders. The crowd may come in at the open.
ii. If the gap is more than 2 points, there will be some profit-taking. If you think of buying, buy after retracement after around 9:30am
The power of trend-line and trend cannot be denied.
i. The breakout of consolidation can see price move up fast.
ii. The breakout of down or up trend can see trend change whether it is short-, medium- or long-term.
iii. Go with the gap with the direction of the trend. The gap with the trend is much bigger than the gap against the trend.
iv. The longer the market is consolidation, the better the trade is if the price breaks out.
v. The trend is always your best friend.

I need to take a step-by-step concept when implementing my AT strategy. I will add additional one contract first. I will add 2 contracts after 2 more trades. I want my mind to get used to it.