Part 6 : Trading Tactics

There are some important details which remain that can make a significant difference in the profitability of trading:

1) Entering Orders

2) Dealing with Fast Markets

3) Spreading

4) Pyramiding

5) Correlation Trading

6) Take Out Some Profits

Entering Orders

There are two ways that RPTS frequently use to enter positions:

1. Use the stop orders

2. Watch the market and enter orders when the price hit the entry levels. (Limit Order)

In general, it is better to place limit orders instead of market orders. This is because limit orders offer for better fills and less slippage than do market orders.

It takes some skill to be able to determine the best price for limit order, but with practice, one should be able to get better fills using limit orders places near the market than with market orders.

Dealing With Fast Markets

At times, the market moves very quickly through the order prices, and if one place a limit order it simply won't get filled. During fast market conditions, a market can move thousands of ringgit per contract in just a few minutes.

RPTS waits until some indication of at least a temporary price reversal before placing orders. This is often resulted in much better fills than would have been achived with a market order. If the market stabilized at a point which was past stop price, RPTS gets out of the market, but RPTS do so without panicking.

Spreading

Spreading strategy is only applicable to MDEX Crude Palm Oil. But what is spreading?

Spreading is a strategy where RPTS opens both buy and sell positions of the same product but different contract month. There are two types of spreading:

1. Spreading Losses

2. Spreading Profits

Reasons to do spreading:

1. Instead of accepting losses, RPTS spreads in order to lock losses. This is done to disallow demotivation

    in losing money.

2. Even though the exit signal is there, RPTS spread for temporary retracement wjile the long perspective

    of prices is still trending.

Pyramiding

Pyramiding is a money and trading skill which only can be done through Futures Trading as the equity increases, more trading positions is allowed as long as there are enough money for margin requirements.

Example:

Notice that, more trading positions are taken as equity increases with enough money to add positions.

Pyramiding in adding positions is allowed only when:

1) There is a trading signal.

2) All transactions are profiting if they should be liquidated at the exit level.

3) Enough margin to add more positions. 

Correlation Trading

MDEX CPO is correlated with Chicago Bean Oil (CBOT BO).

See any similarity?

Since MDEX CPO is correlated with CBOT BO, both can be used as indicators to each other. Say for example: Both MDEX CPO and CBOT are congesting but later CBOT BO made a move as a trend, RPTS will trade CBOT BO for a short-term basis while waiting for MDEX CPO to make a move.

Another example: say that RPTS is having a spreading positions in MDEX CPO due to the sudden sideways move, RPTS will focus on CBOT BO for conviction.

Take Out Some Profits

RPTS suggest investors to take out some trading profits - 50% of the profits every 6 months. taking profits abide with trading objectives.

Part 1 : Introduction

Part 2 : Resam Padi Trading System

Part 3 : Technical Analysis

Part 4 : Technical Tools

Part 5 : Money Management

Part 6 : Trading Tactics

Part 7 : Trading Journal