How many times have you seen a potential stock moving up nicely and aroused you to buy into it as you think it can go further higher but to the disappointment it moves the opposite way?

Let us take a look at this example which follows up from my previous post;


A buy call was made at the price range of (1.20-1.23). A stop loss was made at (1.18).

If you anticipate the price is going to go higher it will mean by breaking above RM1.23 Top Resistant to achieve higher highs = higher profits for you.

But what happens after you buy into it and the price moves the opposite way? This is where your Trading Plan matters to you. Knowing when to buy is always easy and doable. But knowing when  to sell for profits or more importantly sell for capital protection is no doubt a tough job yes?

The importance of Stop Loss is to let you know “how much are you willing to lose in this trade”. Assume you bought at the highest price at RM1.23 and you are forced to sell for a loss at RM1.18 or perhaps RM1.17 you will lose a maximum of 4%-5%. Bear in mind that before you even place the trade  into this stock, you have already know your downside risks can hit 4%-5%.

Initiating a Stop Loss in each of your trades allows you to trade the stock rationally instead of playing the game of hope. Even when you are forced to execute your stop loss plan you have already accepted the fact of 4%-5% of losses in order to protect your capital.

What happens if Stop Loss is never part of your trading plan?

The lowest price it went was RM1.07 which gives you a dear-13% losses. This did not happen in a course of 1 or 2 days trading period. It lasted for a straight 6 trading days. Enough to give you a mental disorder?

Second-Chance Opportunities

Trading requires patience and patience is an art of knowing when to act on the right timing. A bullish stock like how I always shared to the public is to see its price staying above its Daily Chart EMA200days.

The recent sell down on the price of this stock had been follow up by a rebound back ABOVE its EMA200days critical support which is RM1.10.

A complete Uptrend Cycle Formation is formed in the month of September.

As the price breakout of its RM1.13, that is a break out point for the price momentum to kick in.

Don’t forget your stop loss is placed at RM1.08 which gives you a -4% of downside risk to manage.

Trading Profits are locked at RM1.23 which mean if you are a short term trader you can start to manage your profits selling point around that range.

(All information display above are for education purposes. Please do your part of homework and have your trading plan before you execute your trades)

Another Second-Chance Opportunities stock?



(All information display above are for education purposes. Please do your part of homework and have your trading plan before you execute your trades)

8 Days Counting Down



Catch Mr.David Lee on sharing his ideas and views towards the Derivatives Market (FKLI Futures, FCPO Futures)


Mr.William Au on sharing his views towards the Equities Market towards the Year end of 2016!