Core Trading for a Living

Transcription

1 Pristine.com Presents Core Trading for a Living With Oliver L. Velez Founder of Pristine.com, and Author of the best selling book, Tools and Tactics for the Master Day Trader Copyright 2002, Pristine Capital Holdings, Inc.

2 Table of Contents Introduction The Major Time Shift The Major Analytical Shift Fundamental vs. Technical Foundation Four Styles of Trading Core Trading Defined Core Trading vs. Investing Macro Core vs. Micro Core The Never-ending ending Battle Tools of the Core Trade The Key Events 3 to 5 Bar Set-ups Tail Set-ups COG Set-ups The Strategies Mighty MA Play Pristine Buy/Sell Zone CBS & CSS Plays Putting It All Together

3 Introduction Introduction

4 The Major Time Shift Fact # 1 Fact # 2 20 years ago, the typical investor looked to hold a stock position for 4 ½ years, on average. Today, the typical investor looks to hold a stock position for 4 ½ months.

5 Pristine Theories Theory # 1 Theory # 2 We believe, the investor s average holding period for any stock will drop to 4 ½ weeks. inside of 2 years!! Long-term Investing, commonly referred to as the buy-andhold approach, is becoming less effective each year!

6 The Dynamics of Change What has led to this dramatic change? I) 25 Year Decline in Commission Rates II) Worldwide Collapse in Interest Rates III) Phenomenal Technological Advancements IV) New Order Handling Rules V) The Advent of the Internet VI) A More Sophisticated Public

7 Fundamental vs. Technical Fact # 1 Fact # 2 20 years ago, fundamental analysis was considered the only proper way to make market decisions Today, the purely fundamental analyst is virtually extinct. Mark Douglas, author of The Disciplined Trader and Trading In The Zone

8 The Dynamics of the Analytical Shift What has led to this dramatic shift? I) Money! II) Markets are not mathematically logical and/or rational III) The hopes and fears of people move stocks IV) Under extreme stress and glee, people react the same way. V) Charts are the foot prints of these actions and reactions VI) In other words: Charts Don t Lie!

9 The Building Blocks Foundation

10 Four Styles of Trading Types of Trading Four Styles of Trading: Core; Swing; Guerilla; Micro Which fall into. Two Broad Trading Categories: Wealth; Income

11 Two Broad Trading Categories Wealth Trading Styles Core Trading - Weekly Charts - Weeks to Months Swing Trading - Daily Charts - Days to Weeks Income Trading Styles Guerilla Trading - 60 Min & 30 Min - Hours to Days Micro Trading - 5 Min & 15-Min - Minutes to Hours

12 The Pristine Philosophy Pristine Tip: The Pristine Trading Philosophy calls for a trader to have 1) a Wealth Building trade and 2) an Income Producing trade on. At All Times!

13 Core Trading Defined What is Core Trading? 1) A style of market play that typically covers a holding period of several weeks to several months. 2) There are two forms of Core Trading: Macro; Micro 3) This style of trading has become the new form of investing. 4) The Core Trader uses weekly charts to make entries and exits. 5) Core Trading is best used on key stocks and indices. 6) Core Trading is the key to capturing substantially bigger gains than the swing and/or day trader is accustomed to. 7) Core Trading is style of trading that can be practiced by ALL!!

14 Core Trading vs. Investing Core Trader Sells! Investor Buys! Core Trader Sells! Core Trader Buys! r20ma r40ma The Investor is a loser! Core Trader Shorts! d20ma d40ma Shorts! Chart Courtesy of MasterTrader.com

15 Macro vs. Micro Core Trading Macro Core Trader Sells! Key Point: The Macro Core Trader looks to ride the entire (macro) move, while ignoring the temporary weekly set backs. r20ma r40ma Micro Core Trader Sells! Key Point: Key Point: The Micro Core Trader only looks to ride one color, primarily. This is the no pain approach. Micro Core Trader Sells! r20ma r40ma Macro Core Trader Buys! Micro Core Trader Buys! Charts Courtesy of MasterTrader.com

16 Core Trading Chart (QQQ) CSS S 3-5 S Candlestick Bars 3-5 B BT Pristine Charting Power!! Color Coded Volume 3-5 Volume Climax B CBS S 20ma 20ss B 40ma S Chart Courtesy of MasterTrader.com

17 Core Trading Tools Tools of the Core Trade Charting Tools: Weekly charts displayed in Japanese Candlestick form. Technical Tools: Color coded volume; 20 & 40 period simple moving averages.

18 Weekly Chart with Volume Japanese Candlesticks Wide Bars Color coded Volume Small Bars

19 Core Trading Tools 1) Weekly Chart 2) Colored Volume The Only Tools You Need! Japanese Candlesticks 3) 20sma 4) 40sma B B B B B r40ma r20ma Color coded Volume

20 The Weekly Battle Determining Who Won The Battle High Close High Open Low Open Low Close Bulls Win Bears Win Pristine Capital Holdings, Inc.

21 An Important Statistical Fact Pristine Tip: Bulls and Bears cannot consistently win more than 5 battles in a row. Each side typically surrenders to the other after 3 to 5 battles won. However If the Bulls or Bears win significantly more than 5 battles in a row, a catastrophic loss will be the price paid for such an abnormal winning streak.

22 3 Key Pristine Events The Key Events

23 3 to 5 Bar Rallies 3 Pictures of Greed Think Sell Think Sell Think Sell 3 Bars Up 4 Bars Up 4 Bars Pristine Up Capital Holdings, Inc. 5 Bars Up

24 3 to 5 Bar Declines 3 Pictures of Pain Think Buy Think Buy Think Buy 3 Bars Down Pristine Capital 4 Bars Holdings, Down Inc. 4 Bars Down 5 Bars Down

25 Count Your Way to Profits 4 Green Bars 3 Green Bars 3 Green Bars 3 Red Bars 5 Red Bars 3 Red Bars 5 Red Bars Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

26 Count Your Way to Profits 5 Green Bars 3 Red Bars 4 Red Bars 3 Red Bars Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

27 Bull & Bear Tails Bottoming & Topping Tails 3 or more green bars + Topping Tail (TT) 3 or more red bars + Bottoming Tail (BT) Pristine Capital Holdings, Inc.

28 Topping Tail Play I 1) 6 Up Bars in a row 2) Topping Tail (TT) The Party is Over! Topping Tail 6-Up Topping Tail 6-Up $160 Catastrophe! r20ma r40ma r20ma r40ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

29 Bottoming Tail I 1) 6 Down Bars in a row 2) Bottoming Tail 110% Party! It s Party Time! 6-Down 6-Down Bottoming Tail r40ma r20ma Bottoming Tail r40ma r20ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

30 Bull & Bear COG Changing of the Guard (COG) 3 or more green bars + Bear COG 3 or more red bars 3 or more red bars + Bull COG Pristine Capital Holdings, Inc.

31 Bear Changing of the Guard Topping Tail Bear COG 1) 5 Up Bars in a row 2) Bear COG 3) Topping Tail (TT) The Party is Over! 5-Up Topping Tail Bear COG 5-Up $120 Catastrophe r40ma r40ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

32 Changing of the Guard Plays 4 Up Bars 3 Up Bars 5 Down Bars Bear COG 3 Up Bars 5 Down Bars 3 Down Bars Bull COG Bull COG Tails Bull COG 4 Up Bars Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

33 Pristine Core Trading Strategies The Strategies

34 Mighty 20ma Plays The Powerful 20ma Play 3-55 Red Bars + Bull COG r20ma + = High Odds Rally d40ma r20ma Pristine Capital Holdings, Inc Green Bars+ Bear COG d20ma + = High Odds Drop

35 20 MA Play I 1) Rising 20 MA (r20ma) + 2) Rising 40 MA (r40ma) + 3) r20ma > r40ma = Stock Will Rally Off r20ma 3 D/Bars 3 D/Bars r20ma r40ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

36 20 MA Play II 1) Rising 20 MA (r20ma) + 2) Rising 40 MA (r40ma) + 3) r20ma > r40ma = Stock Will Rally Off r20ma r40ma r20ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

37 20 MA Play III 1) Declining 20 MA (d20ma) + d20ma d40ma 2) Declining 40 MA (d40ma) + 3) d20ma < d40ma = Stock Will Decline Off d20ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

38 20 MA Play IV d20ma d40ma 1) Declining 20 MA (d20ma) + 2) Declining 40 MA (d40ma) + 3) d20ma < d40ma = Stock Will Decline Off d20ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

39 Pristine Buy & Sell Zones Pristine Buy & Sell Zones Pristine Buy Zone Play (PBZ) Sell Zone d40ma d20ma r20ma r40ma Buy Zone Pristine Capital Holdings, Inc. Pristine Sell Zone Play (PSZ)

40 Pristine Buy Zone Play I r20ma r40ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

41 Pristine Buy Zone Play II r40ma r20ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

42 Pristine Sell Zone Play I d20ma d40ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

43 Pristine Sell Zone Play II d20ma d40ma Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

44 Wide Distance Wide Distance Wide Distance Wide Distance Climactic Sell Climactic Buy & Sell Set-up Climactic Buy & Sell Set-ups 5 or More More Up Bars Snap Snap Back Back to to 20ma 20ma 20ma 5 or or More More Down Down Bars Bars 40ma Snap Back to 40ma Pristine Capital Holdings, Inc. Climactic Buy

45 Climactic Sell Set-up I 1) 6 Up Bars in a row 2) 2 Topping Tails (TT) 2TT 2TT 3) Wide Distance from 20ma The Party is Over! r20ma r40ma 6-Up 6-Up $75 Catastrophe Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

46 Climactic Sell Set-up II 1) 5 Up Bars in a row 2) 3 Topping Tails (TT) 3TT 3TT 3) Wide Distance from 20ma 4) Climactic Volume The Party is Over! r40ma r20ma 5-Up $85 Catastrophe r40ma r20ma 5-Up Climactic Volume Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

47 Climactic Sell Set-up III 1) 5 Up Bars in a row Tail/COG Tail/COG 2) Topping Tail (TT) 3) Bearish COG 4) Wide Distance from 20ma The Party is Over! r20ma r40ma 5-Up $70 Catastrophe r20ma r40ma 5-Up Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

48 Climactic Buy Set-up I It s Party Time! d20ma d20ma 125% Party! 1) 9 Down Bars in a row 2) Climactic Volume 3) Far from 20ma Climactic Volume 9-Down Climactic Volume 9-Down Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

49 Climactic Buy Set-up II 1) 6 Down Bars in a row 2) Bullish COG 3) Far from 20ma d20ma d20ma It s Party Time! 6-Down COG A 100% Party 6-Down COG Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

50 Climactic Buy Set-up III 1) 4 Down Bars in a row 2) Climactic Volume 3) Bullish COG 4) Far from 20ma d20ma It s Party Time! 4-Down COG $12 Party 4-Down COG Climactic Volume Climactic Volume Pristine Capital Holdings, Inc. Chart Courtesy of MasterTrader.com

51 Core Trading Summary Core Trading Combinations 3 to 5 Bar Buy/Sell Set-ups Can happen with: 1) Topping/Bottoming Tails and/or 2) Bull/Bear COG Set-ups These Combinations can happen: 1) At or Near the 20ma or 2) In the Buy/Sell Zones or 3) Far from the 20ma Powerful Core Trading Combinations Location

52 STOCK UNIVERSE AND YOUR PLAN STOCK UNIVERSE Introduces

53 STOCK UNIVERSE AND YOUR PLAN What is? STOCK UNIVERSE Inspired by feedback from our seminar students, subscribers, and the active trading community, Pristine ESP was developed to alert traders to the exact moment when a Pristine trading opportunity occurs. ESP does the work for you, using Pristine's proprietary technical analysis while scanning thousands of stocks simultaneously. Once a powerful setup is identified, ESP swings into action, providing real time alerts delivered without a moment's delay.

54 STOCK UNIVERSE AND YOUR PLAN What is? STOCK UNIVERSE TRADING PLAN The Pristine ESP product is programmed to identify key setups TECHNOLOGY occurring daily in the marketplace. These setups are based on the proven methods that Pristine.com has been teaching successful traders for the last seven years. In addition, Pristine ESP alerts traders to stocks meeting more generic criteria.

55 STOCK UNIVERSE AND YOUR PLAN What is? STOCK UNIVERSE TECHNOLOGY The moment an individual stock matches a defined setup, the Pristine ESP alerts are instantaneously broadcast to the trader's computer. Pristine ESP is able to simultaneously monitor the stocks on NASDAQ and NYSE and alert subscribers at the exact moment when any of these stocks meets the defined criteria for a particular trading system.

56 STOCK UNIVERSE AND YOUR PLAN Real Time Alerts & Scans STOCK UNIVERSE Basic provides over 30 alerts and scans. Master provides over 140 alerts and scans for the: Basic Trader Core Trader Swing Trader Guerilla Trader Micro Trader

57 STOCK UNIVERSE AND YOUR PLAN What is? STOCK UNIVERSE Through Merlin s messages, we will be reminded of useful information. Pristine ESP continually reminds the trader of certain trading timeframes, and what should be done during those timeframes.

58 STOCK UNIVERSE AND YOUR PLAN STOCK UNIVERSE & Your Trading Platform The Pristine ESP can be used to provide alerts with your quote and trading platform. customers can link Pristine ESP to their trading platform, allowing the ESP selection to load automatically into the linked windows in addition to performing over 79 scans

59 STOCK UNIVERSE AND YOUR PLAN STOCK UNIVERSE Where To Get OR Contact a Pristine Counselor today for more information about Pristine ESP in addition to Pristine s other education services.

60 STOCK UNIVERSE AND YOUR PLAN STOCK UNIVERSE The Pristine Day Trader Pristine Real Time Rooms Pristine Lite PDT Intra-Day Updates

61 Tools & Tactics A Must Read A Japanese proverb says, If you wish to know the road, inquire of those who have traveled it. The authors of Tools and Tactics for the Master Trader clearly know the road. Their unique insights, trading tactics and powerful tools, so enjoyably presented, make this a book that belongs on every trader s shelf. Steve Nison, CMT - Author of Japanese Candlestick Charting Techniques

62

63 Pristine Seminars

64 The Pristine Core Trader

65 Pristine CD ROM Collection For this and other seminars on CD visit:

66 Mastertrader.com

67 Pristine s Core Trading Manual Pristine s Core Trading Manual is available for download at: Copyright , Pristine.com. All rights reserved. COPYING AND OR ELECTRONIC TRANSMISSION OF THIS DOCUMENT WITHOUT THE WRITTEN CONSENT OF PRISTINE.COM IS A VIOLATION OF THE COPYRIGHT LAW