No ID-NR4 Trade

Trade Planning and Management

April 21, 2006

Entry Strategy for Buy stop order
a. Option 1: The price opens higher than 939.5
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 < 10 points
b. Option 2: The price opens lower than or equal to 939.5
i. Put a buy stop order at 940 after FKLI opens for the whole day.
ii. If the order is triggered, put a sell stop order at 935, 1 tick below the prior day’s 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.

I will not short as the market is on the up-trend.

My actual Entry Strategy and Trade Management
a. I did not enter this trade because:
i. The first breakout of new high will usually fail in FKLI and it is more statistical proven if the pattern is an ascending triangle breakout
ii. It is Friday. There are fewer crowds to push the price.
iii. There is a strong up action with a gap-up. I did expect 50% re-tracement before the price moves higher
iv. Next week is a roll-over week.
v. The ID-NR4 appears only on Spot Month chart and it is ID for Next Month chart. There may be whipsaw in ID-NR4 pattern
vi. I have a existing FCPO trade. I do not want to be distracted.

b. The price closed lower the resistance of 944 for Spot Month and 941.5 for the Next Month. If I had entered, I would have gotten out with a small loss The breakout may have failed.

Trade executed according to plan? Yes