Saturday, February 22, 2014

How to Jump on the Running Train (Trend)?

Apparently, FCPO is trending. I guess not everyone is enjoying the bull run because they missed the train. They chose to believe the breakout above 2700 is false. They were afraid to buy "high". They would rather miss the trend rather than risking their "sacred" capital. Whatever reasons it may be, if you are not on board of the bullish train, you may tempted to buy to participate in this "cpo bull of a lifetime". I received several requests and emails these few days, asked me how to get in the long side of the market. In this post, let me share some of my ideas for those who wants to buy but afraid the price is overly extended.

First thing you might need to ask yourself what is your objective of going to long this market? Of course a lot of people will probably say "money". I knew but you need to find out what kind of profits are you looking for in this long trade. If you are looking for 50-100 points quick profits, In my opinion, forget about it. You shouldn't be trading at all. For me, I will definitely want to participate in this rally to maximise the profits, meaning I will let the profits run as long as possible. In other words, I will only exit this long trade when market reverses and turns bearish (I will have my own method to determine when that happens).

Zoom in to 60 min chart to find trading opportunity. Retracement provides good and low risk entry into a developing trend. When price broke 2700, it didn't immediately shoot up uncontrollably. It retraced towards 2700, then moved up. This is a good place to initiate new long. One may wait till market completed the retracement by buying above the previous recorded high. In this example, buy above 2734. At the same time, set the initial stoploss below 2700. This involves risking about 40 points (RM1000) per lot.

The last time FCPO trading above 2700 was more than 12 months ago. This bull looks like still have a long way to go before it ends, therefore I suggest letting the profits run as far as it can. In this case, risking RM1000 per lot to achieve an unlimited profit target seems viable and logical. In case the long position got stopped out prematurely, I would definitely take any chance to re-establish long position again. Anyhow, if you look at 60min chart again, market broke the last resistance (2756) again last Friday.

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