FKLI May 2006 – Intra-day Long Trend Confirming Trade 7 – Closed with Net loss of RM525

Market Information

Trend:
- Intra-day: Up
- Minor Trend: Down
- Intermediate: Up
- Is the trend is strong? No
- Is the price just comes out from consolidation? Yes
- There is a possible long trend confirming trade
- Entry signal: Doji or white candle with higher volume on 5 and 15 minute chart.

Entry:
On White candle with higher volume than previous bar on 5 and 15 minute chart
- Entry at 957.5
- Protective stop: 955.5, 2 point loss and 1 tick below the low of 956 on intra-day 5 and 15 minute chart low

Possible Exits:
- Exit if the protective stop is triggered.
- Exit near MOC at 5:13pm if the trade is not profitable
- Exit when there is a big profit with long white candle with blow-off volume.

Trade Management

May 11, 2006

Entry Strategy
a. Watch the intra-day chart 5 and 15 minutes to see a trend-confirming setup.
b. Enter 1 tick above the last bar, if the 5-minute chart shows a doji or white candle with higher volume than previous bar.
c. Place a protective stop at 1 tick below recent 15-munite chart low.

Adding more contracts
No

Trailing Stops
a. If the stop order is triggered, put a stop order 1 tick below 15-minute chart low. The stop should not be more than 3-point from the entry price.

Exits
a. When your initial protective stop order is triggered
b. Near MOC at 5:13pm if the trade is not profitable
c. Near MOC at 5:13pm regardless whether the trade is profitable or not
d. When the projected trend confirming target of 961.5 is hit.
e. Let the trailing buy stop follow the price until it is taken out.

Re-entry
No

Today’s Entry strategy:

My actual Entry strategy:
a. DJIA gained 2.96 points.
b. I did not plan the trade but I saw it on the line chart of Apex Online price.
c. I do not what put me on the trade.
d. I called Joanne to ask for 5 and 15 minute chart to check the setup.
e. I enter at 957.5.
f. After checking the chart again, there is not entry signal (no doji or white candle with higher volume than previous day). I made a mistake not to setup and plan for the trade. This trade actually helped me setup my trading plan for it.
g. The price did hit 958 again but failed to break the high the intra-day and previous day.
h. The price then went side way and was moving along 956.5 and 957.5 for the whole afternoon.
i. I did not know whether to exit or not as there is experience that when I exited, the price shot up.
j. I waited. I told myself if the trade is not profitable I will exit.
k. CI is strong as there is not correction as the price moved side-way even it lost 3 point on the intra-day basis but May Contrat actually gained 2 to 3 points.
l. CI closed 0.57 point lower with ID-NR7 with higher volume.
m. There is some short-covering as those who shorted covered.
n. The price did broke 958 to hit 959 but the price failed to break 960.

Trade executed according to plan? No. This trade helps me to plan for Intra-day trend confirming trade.

What are my entry options:
Exit near MOC regardless of loss or gain.
Exit when the price broke the trend-line.

May 15, 2006

Today’s Trade Management:
a. The price may open lower or gapped-down as DJIA lost 261.5 points (141.92 on Thursday and 119.58 points on Friday).
b. Call Apex at 8:42am to check the pre-quote price and OI.
c. Call Apex at 8:45am to check the opening price. If the price fails to open gapped-down, the May contract is strong.
d. Trade Management for Existing contract:
i. If the price opens gapped-down, do nothing initially. Closed the position after 10:30am.
ii. If the price opens gapped-up, put my sell stop at 953. 1 tick below previous day’s low
iii. If the price opened lower, flat or higher, put my sell stop order at 952.

e. Possible Exits
i. When my initial protective stop order is triggered
ii. When the projected Trend Confirming target of 961.5 is hit.
iii. When the price breaks a up-trend line.
iv. Exit MOC if the price forms a long white candle with blow-off volume.
v. When the trailing stop is hit.

f. Subsequent Trailing Stops for Existing contract:
i. 953, the initial stop
ii. 958.5, my breakeven point if the price breaks 962.5.

My actual trade management:
a. The price may open lower gapped-down as DJIA lost 261.5 points (141.92 on Thursday and 119.58 points on Friday).
b. I waited until the price hit 949 and rebounded to 952. I put in a stop at 948.5, 1 tick below the intra-day low.
c. The price failed to move up at 10:30am. I did not close my trade. I did not know why I did it. I am hoping the market would turn.
d. The price hit my stop at 948, 1 tick lower. I was out with a big loss of RM525 (RM50 * 9.5 points + commission)
e. The price did hit the low of 941 before closing at 947.

Trade executed according to plan? No. I was emotional attached

My actual exit options:
Exit MOC on Thursday with 1 point gain
Exit at the open at 953.
Exit at 950 if the trade is sitting on a big loss

What I have done best:

What I need to improve:
a. I need to back-test the setup with more paper-trades.
b. I then need to write down the signals and their confirmation the plan.
c. I then need to paper-trade one more trade before entering the actual trade. The paper-trade allows me to find out more parameters for the trade and how I do trade management.
d. I will let the loss more as trading is a business. Learn to cut losses fast and keep it small. The profit will take care of itself


What I have learned:
1. When I am in a trade, especially a losing one, I trend to hope the market will turn. Things like: remember the market turned around last time.
i. Keep losses small and cut it fast.
ii. Go away from the screen. Review the chart on the paper to get more details.
iii. Take deep breath 3 times and sell how LBR or Larry Williams sitting on my chair trading.

2. I will not take intra-day trade as I do not have the up-to-the-minute chart. I will use it a confirming point on whether I will keep my existing trade.

3. I got slopping after a big win and take not good trade.
i. I should walk away for 2 days to relax my mind.