My Small Account Monthly Update: December 2010

FKLI Update: Roll to new year Jan 2011

*FKLI roll LONG 1528 for January month..

*CPO still remain the same, holding LONG 3606 for March contract..

Happy New Year 2011..

* I wish to all my die-hard supporters err followers err friends, a Happy & Prosperous New Year 2011.. i'm looking forward to test my new created system with real hard CASH, i tested the new system 30 October 2010 & as 31 December 2010 the new system stands pround at profit 778 from 28 trades in only 2 months.. but its not fully tested yet as i need few more month to say that this new system will fight neck to neck with my current, proven & stress free ROJAK system. This new system much more faster and the main agenda is for "kopi" money & my ROJAK system still maintain its true CORE as my trend following (longer term) system.. "BIG MONEY MADE ON THE SITTING NOT THE THINKING" , J.Livermore..

* Happy New Year to all, to new trader learn learn learn, for experience trader i believe i already set a benchmark to all of you.. hopefully we all will win big looking forward 2011 and beyond :)) and to those traders that already WHACK by the market in 2010 and planning to make a come back in 2011 i wish goodluck.

*Good bye 2010 & here i come 2011.. hahahaha

Chart update: CPO & FKLI

FKLI


CPO

*This is trend following, no thinking involve, no second guess just stay true to market movement.. Enjoy :))

Merry Christmas..

*I wish Merry Christmas to all my blog readers, followers, friends etc etc.. Have a blast guys/gals and may your wish come true..

CPO Update: 22.12.2010

*CPO, turn LONG 3606 for March contract..

*FKLI still holding LONG 1483..

What Is A Trading System And How Do I Get One Working For Me?

By Michael Levin

1. A Trading system is a defined set of rules that trigger entries and exits in a particular market or group of markets.
   
   
2. Most systems use algorithms, setups or "situations" that occur in the market that trigger an entry (long or short).
   
   
3. An example of a simple system called an "Opening range Breakout" would be to wait until a stock or index has opened for the day and after the first 30 minutes of trading, if the market being tracked breaks above or breaks down below that 30 minute range, the "system' would enter a buy order if breaking above or a sell/short order if breaking below.

Here is an example - S&P 500 ETF Friday December 17th

1. Opening range established between 9:30 am EST
2. Low 123.91 - High 124.11
3. A break of the high will trigger a buy and a break of the low will trigger a low.
   
   
   
   If you cannot view the above chart, go here.
   
   
4. Notice the breakout "A" was just by a few ticks or so. Some systems will buy a breakout by even the smallest of increments, other systems have rules that further trigger, such as volume, Stochastics, MACD, Relative strength, CCI, etc.
   
   
   
   If you cannot view the above chart, go here.
   
   
5. Notice that there was no follow through on this breakout and it went and broke through the lows by just a bit soon after in area "B"
6. If a system isn't robust enough it will be buying breakouts that aren't strong and then get washed out on the subsequent pullbacks that break to new lows.
7. Notice that on this day, that "washout" of area "B" had a nice recovery and moved up again to a brief new high at area "C", traded sideways and then had a "real" breakout in area "D"
   
   
   
   If you cannot view the above chart, go here.
   
   
8. I drew a trendline under the range of the breakout in area "D" that proved to be the "tipping point" at which the bulk of the move was over that area "E" shows as the breakdown of the days move and also gives a chance for late day reversal signals to take place as another type of stand alone system.

The point I want to make here is that there are so many types of trading days that can occur. In an article I wrote for www.FutureSource.com in early December 2010 ( go here to read the article) I talk about how easy it is at the END of the day, to look back and see what one could have done, than it is to be trading well AS the market is open and trading.

By using a system that is programmed to take advantage of "certain" moves in the market, WITHOUT the human emotions that usually have a bias associated with it that often are triggered by greed or fear (should I buy before I miss this move or should I not sell because I don't want to get stopped out) a system is more reliable over time and has the added advantage of waiting until all the signals (metaphorically) are green (for a buy) or red (for a sell).

Systems that trade for a client directly into their own account are highly valued by those that havemoney and know how to make it work for them . Those who have never had a system working for them; seem suspect these days, as I speak to literally hundreds of investors per month and because of the Bernie Madoffs of the world and other "scammers" that exist on the internet, they can be reluctant to try one.

One particular person wanted to "watch" the system over time and see if he liked it. He saw a track record of 4 years with returns averaging 60% per year Net and yet that wasn't good enough for him, he was too skeptical.

After 4 months of watching the beginning of 2010, the system was up almost 28% (that he missed) and begrudgingly he set up his account, only to see the system draw-down 20% in 45 days after he got in. He jumped out and closed his account swearing that he always loses when he does things like this.

I'm sure you know what happened right after he got out; the next 3 months the system went up 55% without him, giving the best 3 month performance stretch in over 2 years. Had he started when he was presented with the system, he would have been up a Net 67% on his account, instead, because of HIS EMOTIONS (which is why we use systems) HE stepped out of a winning system and wound up with losses of 22% (right at the lows I might add). Summing up systems; Find a system with a verifiable track record that you can live with over the course of a few YEARS. Define the worst draw-downs and fund your account so you don't get scared out when a draw-down occurs, because they WILL happen to everyone. Lastly, let it ride, compound your gains and you may find as I have that trading systems are the way to go for a portion of a smart portfolio. I adjusted these lines from the movie the Terminator to fit with how I view automated systems trading. Here are the original lines from the Terminator: That Terminator is out there. It can't be bargained with, it can't be reasoned with. It doesn't feel pity or remorse or fear and it absolutely will not stop, ever, until you are dead. My version: This system is traded for you; it hasn't been optimized or changed since it was invented. It trades whether you are sleeping or working or driving on the highway and it doesn't stop crunching the numbers until the trading day ends. It has no fear, no greed, it doesn't care what Ben Bernanke or Barrack Obama or China does. It doesn't argue with the boss, it doesn't have a bias of where the market is going and it doesn't take coffee breaks. It just keeps on spitting out results day after day after day and it will not ever stop until you tell it to. Systems are your designated hitter; you can stay in the stands and watch them do the heavy lifting... Just don't sit there and watch these systems winning for others while you are still "thinking about it". Featured Article from FutureSource.com

CPO Update: 16.12.2010

*CPO i turn SHOT 3587 for March contract..

*FKLI still holding same position LONG 1483..

CPO & FKLI Chart Update:

FKLI


CPO

CPO Update: 09.12.2010

*I decided to roll to March 2011 contract for CPO, now this is my new CPO LONG 3569.. very good difference between February contract and March, i manage to get difference of +38pts.. ahhaha

*FKLI still no difference still holding LONG 1483 for December month..

CPO & FKLI Update: 9.12.2010

I just came back from holiday yesterday and this is my update for CPO & FKLI..

*CPO still holding February contract LONG 3266..

*FKLI still same case holding LONG 1483..

Testing New System Update

15)30.11>SHOT 3377-BUY 3483 = -106 (1.12)

16)1.12>LONG 3483-SELL ?? =

*Up +438pts

My Small Account Monthly Update: November 2010

*This my Monthly update..

FKLI Update: Rollover

*FKLI i still maintain Long position.. rolling to DEC month LONG 1483..

*CPO still holding FEB contract LONG 3266..

Testing New System Update

* I call it HE System.. (Head Egg).. hahahaha

1-13) Start 29.10.2010, Up +381.. (sorry i'm lazy to post one by one)

14)25.11>LONG 3214-SELL 3377 = +163 (30.11) total> +544

15)30.11>SHOT 3377-BUY ?? =

*15 trades (9win- 5losses), 1 still open Shot

My new, faster swing system trading (still TESTING mode)

*This is the 14th trade if i not mistaken, i tested the new system few days back and this is the current LONG holding... FEB CPO LONG 3214 (23/11/2010)

*My backtest started from 29/10/2010 and already up about 380+/- pts (i cannot remember the exact winning points, left the record in my office).. maybe i will post the tested NEW system here by tomorrow..

*Base from the date started this new system beat my current ROJAK BEST OF THE BEST SYSTEM by about 100pts+/- (not so sure, cannot remember) but the downside this new system give signal more often 14 against 3.. hahaha

*I'll test till year end to see how it perform against my proven ROJAK SYSTEM

CPO Chart Update Long entry (SAR)

*My new Feb CPO LONG 3266.. SO which way now? Up Up.. hmmm totally no idea

CPO Update: Turn LONG

*CPO i turn FEB contract LONG 3266, its frustrating to let go about 180pts winning (SHOT 3288) and only can win 22pts by turning Long today, what to do that is the downside of trend following :)

*FKLI still same case, still holding November LONG 1505 (roll)..

An Introduction To CANDLESTICKS, PART 4

PART 4

Buy on Greed, Sell on Fear

There are only two forces behind the supply and demand forces that
drive a stock's price higher or lower.

Those forces are the emotional forces of fear and greed. To illustrate
this point we refer to Figure 11.


Figure 11

Suppose you are a trader observing the bullish rally of Stock XYZ at
the beginning of the 3rd bullish green candlestick, and considering an
entry.

You have witnessed the stock rally huge for two days and know that
each trader who entered on the first two days is now a big winner.

Based on the emotion of greed you decide to enter at that beginning of
the 3 day, and mentally count your profits as the price rallies to a new
high.

After the stock closes, you brag to your friends at the golf course
regarding the great trade that you made that day.

You go home from the golf course and celebrate the victory with your
spouse and maybe even discuss how you will use the extra money that
you have earned through the trade.

Now keep in mind that the profit is only on paper and not one penny
has been earned yet.

The next morning you check the price of your position, with
expectations that your bullish stock will rocket to the moon! Now
imagine the emotion that goes through your mind when your position
not only fails to go higher, but also opens below your entry price.

What is the emotion that flows through your body as you not only see
your profits erode before your eyes, but now rob your account of
precious capital?

The emotion that you will experience is undoubtedly fear and will
prompt you to scramble to liquidate your position as soon as possible
to minimize your losses.

Now consider that there were also 2 or 3 thousand additional traders
who entered the same stock at around the same price with the hopes
of the gaining the same
profit.

All of these traders will be tripping over themselves trying to get out of
the stock.

As was illustrated in the previous section, this increase in fear results
in an increase in supply of the stock relative to the increase in
demand, and triggers the sharp decline in the price.

The deeper the red candlestick cuts into the bullish green candlesticks,
the more traders are thrown into losing positions, and thus the further
the price decline.

Perhaps you are beginning to realize the power of emotions in price
movements of a stock.

The technical analyst through candlestick reading is trained to read
this greed and fear emotions in the market and capitalize on them.

Capitalizing on Fear and Greed

From the previous section, we determined that price movements result
from massive emotions of fear and greed regarding trader's position in
the market with a given stock.

Recognizing the footprints of greed and fear is not difficult.
Recognizing the signs that the rally or decline before it happens is the
difficult part of trading. How many times has this situation happened
to you: You enter a trade based on a bullish reversal signal, but then
exit on a slight pull back only too see the stock rally to a new high
after you exit.

Or how often have you held on to a stock that experiences a bearish
pull back in hopes that it will turn around, only to see the stock
plummet to new lows before you finally concede to defeat and exit.

Unfortunately, there is no system that can predict with 100% accuracy
exactly where a greed rally or fear sell off begins. There are;
however, techniques based on candlestick patterns that help us locate
probable areas for these turning points. The rest of this section will
explore the techniques in identifying those probable areas that
properly managed will result in profits for the trader in
the long run.

My CPO FEB contract Chart Update (SHOT 3288)

* SHOT 3288 (16/11/2010) The Chart says everything.. :)