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Trading the Pristine Method

www.pristine.com

Disclaimer It should not be assumed that the trading methods and techniques presented in this book or the seminar will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples in this book and seminar are for educational purposes only. This is not a solicitation of any order to buy or sell. “HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES IN THIS BOOK and SEMINAR HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS WE STATE MAY HAVE UNDER OR OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.” The authors and publisher assume no responsibilities for actions taken by readers and attendees. The authors and publisher are not providing investment advice. The authors and publisher do not make any claims, promises, or guarantees that any suggestions, systems, trading strategies, or information will result in a profit, loss, or any other desired result. All readers and seminar attendees assume all risk, including but not limited to the risk of trading losses. Active Trading can result in large losses and may not be an activity suitable for everyone. Copyright © 1994-2013 by Pristine Capital Holdings, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher. SN: 62272

2

Trading the Pristine Method® The Introduction

www.pristine.com

Table of Contents 1. Introduction • The Six Major Time Frames • The Four Trading Styles • Understanding Candlesticks

3. Pristine Buy and Sell Short Setups • The Anatomy of an Uptrend • The Anatomy of a Downtrend • The Pristine Buy Setup (PBS) • The Pristine Sell Setup (PSS)

2. The Foundation • Pristine’s Master Trading Key #1 • The Only Way to Win • The Only Way to Lose • Pristine’s Master Trading Key #2 • Combining Pristine’s Master Trading

4

Table of Contents 4. Power Trading Combos Stages 2 & 4 • The Changing of the Guard • Narrow Range Bar • Above Average Volume • Minor Support and Resistance • The Mighty Moving Averages • The Pristine Buy and Sell Zones 5. Power Trading Combos Stages 1 & 3 • Major Support and Resistance • The “Pause” That Refreshes

6. Transitional Phases A, B, C, D • The Breakout – Three Criteria • The Breakdown – Three Criteria • Drawing Proper Trend Lines • The Seven Stock Market Events 7. The Climactic Setups • The Climactic Buy Setup (CBS) • The Climactic Sell Setup (CSS)

5

Table of Contents 8. Pristine’s Master Trading Plan • Building a Trading Plan • Money Management • Tactics Description 9. Guerrilla Trading Tactics • Bullish and Bearish Gap Plays • Bullish and Bearish Surprise Plays • Bullish and Bearish 20/20 Plays • +/- 123 Continuation Play • Bull and Bear Trap Plays • Bull and Bear Continuation Plays • Bull and Bear Mortgage Plays

10. Pristine’s #1 Micro-Trading Tactic • The Late-Day Breakout • Momentum Trading Approach 11. Where to Go From Here • Your Next Few Days • Follow Up Services • Future Classes

6

Abbreviations The Pristine Method - Abbreviations Abbrev.

Abbrev.

Name

-123 +123 10/10 Body 20/20 Body +20/20 -20/20 40/60 ANR AON BBB BDF BOF BOM EOM EOD BT TT 2T 2BT 2TT -BM +BM CBS CSS

Bearish 123 Cont. Guerrilla Play +COG Bullish 123 Cont. Guerrilla Play -COG d20ma WRB w/Tails < 10% of Real Avg. r20ma WRB w/Tails < 20% of Real -DD Bullish 20/20 Guerrilla Play +DD Bearish 20/20 Guerrilla Play DTL 40/60 Percent Retracement UTL Add and Reduce DTLB All or Nothing UTLB Bar by Bar GBI Breakdown Failure RBI Breakout Failure GnC Beginning of Month GnS End of Month -GS End of Day +GS Bottoming Tail HH Topping Tail HL Double Top LH Double Bottoming Tails LL Double Topping Tails MOM Bearish Mortgage Play MR Bullish Mortgage Play mR Climactic Buy Setup MS Climactic Sell Setup

Name

Abbrev.

Name

Bullish Changing of the Guard Bearish Changing of the Guard Declining 20 Period Moving

mS NFT NBB NRB NG PG PBD PBO PBS PSS PBZ PSZ PCT PTT R&F RT SO SSS SSW TGT TPM -Trap +Trap +Vol +WRB -WRB

Minor Support No Follow Through Narrow Body Bar Narrow Range Bar Novice Gap Professional Gap Pristine Breakdown Pristine Breakout Pristine Buy Setup Pristine Sell Setup Pristine Buy Zone Pristine Sell Zone Pristine Certified Trainer Pristine TrainedTrader Retest and Failure Reversal Time Shake Out Secondary Sign of Strength Secondary Sign of Weakness Target The Pristine Method Bear Trap Guerrilla Play Bull Trap Guerrilla Play Increased Volume Bullish Wide Range Bar Bearish Wide Range Bar

Rising 20 Period Moving Avg. Deadly Doji Darling Doji Down Trend Line Up Trend Line Down Trend Line Break Up Trend Line Break Green Bar Ignored Red Bar Ignored Gap and Crap Guerrilla Play Gap and Snap Guerrilla Play Bearish Gap Surprise Guerrilla Bullish Gap Surprise Guerrilla Higher High Higher Low Lower High Lower Low Middle of Month Major Resistance Minor Resistance Major Support

7

Pristine’s Six Trading Time Frames The Pristine Method® considers three major time-frame groups as follows: • Long-term timeframes • Intermediate-term timeframes • Short-term timeframes

Let’s briefly review each broad trading category…

8

Trading Time Frames Long Term •

Intermediate-term

|

Short term

Used for broad studies, cyclical analysis and long-term trading Yearly Chart (each bar = approx. 240 trading days) Used for studies and tests on broad indices like the DJIA & S&P 500 Pristine Trading Time Frame #1

Monthly Chart (each bar = approx. 20 trading days) Used by Pristine Trained Traders to find tradable cycles* and long-term trades. Each month, all stocks in your universe are to be viewed via the monthly chart. Pristine Trading Time Frame #2 *Dominant cycles can last for many years. Some of the cycles we have found have lasted more than a decade. Once found, these cycles can offer the long-term trader some incredibly large trading opportunities. It is however important to note that all cycles, even the very dominant ones, do eventually end. 9

Yearly Chart of the DJIA Semi-Log Chart

Crash of 2000 (?)

Trading Tip: This time frame is used primarily to do studies on broad indices over many decades.

Crash of 1987(?)

The Pause that Refreshes

20ma 40ma 1980’s Breakout

Crash of 1929 Pristine CSS

40/60 The PBZ

PBS w/ Bottoming Tail Volume Surge

10

Monthly Long-term Chart Trading Tip: On the last day of each month, the Pristine Trained Trader (PTT) looks at each stock in his Trading Universe through the eyes of the monthly chart.

Circles = Pristine Trading Opportunities

PBS

20ma

PBS

40ma

11

Finding Cycles w/ the Monthly Chart

(3/98)

(3/00)

(3/02)

(3/99)

Resistance

(3/01)

(10/97) (10/01)

Support (10/96)

(10/98)

(10/00)

(10/02)

(10/99)

12

Trading Time Frames Long Term

•

Intermediate-term

Short Term

Used primarily for Swing trading & Core trading Weekly Chart (each bar = 5 trading days)

This time frame is visited each week by Pristine Trained Swing and Core traders, but is primarily the domain of the Core Trader. Each weekend, all stocks in your Trading Universe should be viewed via the weekly chart. Note: This is where the Core trader will spend 90% of his time and get 85% of his entry and exit signals. Pristine Trading Time Frame #3

Daily Chart (each bar = 1 full trading day) This time frame is visited each day by Pristine Trained Intra-day and Swing traders, but is primarily the domain of the Swing trader. Each night, all stocks in your Trading Universe should be viewed via the daily chart. This is where the Swing trader will spend 90% of his time and get 85% of his entry and exit signals. Pristine Trading Time Frame #4 13

Weekly Intermediate-term Chart Trading Tip: Each weekend, the Pristine Trained Trader (PTT) looks at each stock in his Trading Universe through the eyes of the weekly chart.

Stage 3

CSS

40ma 20ma

PBS w/BT Circles = Pristine Trading Opportunities

14

Daily Intermediate-term Chart

PBD

40ma

PSS Trading Tip: Each day, the Pristine Trained Trader (PTT) scans through his Trading Universe for Pristine Setups.

20ma

PSS

Circles = Pristine Trading Opportunities CBS w/ BT

15

Trading Time Frames Long Term

•

|

Intermediate-Term

Short-term

Used for Day, Micro & Scalp Trading

Hourly Chart (each bar = approx. 60 minutes) Visited by micro traders at times to eliminate noise and to gain a clearer perspective of the overall “several day trend.” A great time-frame for 2-day plays. The Guerrilla Trader and the active Swing Trader uses this time frame frequently. Pristine Trading Time Frame #5

Intra-day Charts (15-, 5- & 2-minute trading bars) This is where the day trader, micro trader and scalper live their entire lives. Nearly all entry and exit points for these three traders are derived in these time frames. Pristine Trading Time Frame #6 Trading Tip: We focus primarily on 15-minute charts for day trading, 5-minute charts for micro-trading and 2-minute charts for scalping. For NASDAQ, S&P futures, E-minis and extremely active issues like AMZN, YHOO, EBAY, DELL, MSFT, CSCO, etc., we’ll often drop to a 2- minute chart to gain greater clarity and refinement for our entries and exits. We also use the 2 and 5 minute charts for intra-day entries on strong, trending stocks.

16

60-minute Short-term Chart Trading Tip: The Pristine Trained Trader (PTT) uses the 60-minute chart to find Swing, Guerrilla & Day trading opportunities. CSS

Circles = Pristine Trading Opportunities PBO

PBS

20ma PBS PBO NFT 200ma

17

15-minute Chart of GSF Trading Tip: The Pristine Trained Trader (PTT) uses the 15-minute chart to find ‘day trading’ opportunities (minutes to hours).

CSS

Circles = Pristine Trading Opportunities

PBS

200ma PBS

20ma

18

5-minute Short-term Chart Circle = Pristine Trading Opportunity

Retest @ MS PBS

20ma 200ma

WRB

Trading Tip: The Pristine Trained Trader (PTT) uses the 5-minute chart to find ‘micro trading’ opportunities (minutes).

19

2-minute Short-term Chart

PSS 20ma

Trading Tip: The Pristine Trained Trader (PTT) uses the 2-minute chart to find ‘scalp trading’ opportunities (seconds to minutes).

PSS PSS

Circles = Pristine Trading Opportunities

PBS

PBS

20

Pristine’s Four Trading Styles

The Pristine Method® Considers Four Major Trading Styles available to the Pristine Trained Trader (PTT). These styles are grouped into Two Broad categories: • Wealth Building Style • Income Producing Style

21

Pristine’s Wealth Styles Wealth Building Style

Income Producing Style

1.

Core Trading (2 weeks to months). This wealth-building style of trading attempts to capture major trends in the market and/or underlying stock. Most traders will use this style for longer term accounts such as IRAs, KEOGHs and other less time sensitive accounts.

•

Trading Tip: The Pristine Trained Trader uses weekly charts to generate Core Trading ideas.

2. Swing Trading (2 to 10 days). This wealth-building style of trading is designed to capture short-term swings in an on-going trend, while side stepping the brief countertrend moves. It attempts to take advantage of a very overlooked niche, one that is too short for large institutions and too long for day and floor traders. •

Trading Tip: The Pristine Trained Trader uses daily charts for Swing Trading. Note: The Pristine Method® of Trading calls for having at least one of the two wealth-building styles at work at all times. Some of the country’s top traders have amassed very large sums of money utilizing one or both of these trading styles. We encourage that you frequently look for wealth building trades.

22

Weekly Core Trading Chart The Core trader looks for Pristine Trading opportunities in the direction of the 20ma and holds on as long as the stock remains above its a) 20ma for shorter-term trades, or b) 40ma for longer-term trades.

d

e

r Co

en r T

20ma 40ma

Circles = Pristine Trading Opportunities

23

Daily Swing Trading Chart Some Swing Traders sell only part of their position on the rallies, while they continually add on the pullbacks as long as the stock stays in an uptrend.

Sell Sell 4

d Sell c b a

Buy

Buy 2

Buy 3 r20ma r40ma

1 The Swing Trader buys dips at or near the 20ma and sells rallies away from the 20ma.

24

Pristine’s Income Styles Wealth Building Style

1.

•

Income Producing Style

Guerrilla Trading (1 to 2 days). This income producing style utilizes a sniper’s “hit and run” approach. It looks to buy a stock on Tuesday, for instance, and sell it on Wednesday, Thursday or before. Conversely, it calls for shorting a stock on one day, only to cover within the next two days. Trading Tip: The Pristine Trained Trader uses daily and hourly charts to find Guerrilla Trading opportunities.

2. Micro-Trading (seconds to hours). This income producing style is what most people refer to as day trading, and it serves as a major part of the trading foundation for anyone who wants to make a living from the markets. • Trading Tip: The Pristine Trained Trader uses 2-, 5- and 15-minute charts to find Micro-trading opportunities. Note: The Pristine Method® of Trading calls for specializing in both Guerrilla and Micro-Trading, and it calls for always having both of the styles at work. These are the styles that most professional traders focus on. They must be mastered if one wants to trade for a living.

25

Daily Guerrilla Trading Chart 20/20

20/20 -GS

+GS

Circles show four, 2 to 3 day Guerrilla Trading Opportunities

26

15-Minute Day Trading Chart The Pristine Day Trader looks to buy dips at or near the r20ma as long as it is above the 200ma.

Pristine’s Day Trading Formula 20ma is rising (r20ma) + r20ma > 200ma = Buy dips and breakouts near the r20ma

r20ma

Circles = Pristine Trading Opportunities

200ma

27

5-Minute Micro Trading Chart Circles = Pristine Trading Opportunities Pristine’s Micro Trading Formula 20ma is rising (r20ma) + r20ma > 200ma = Buy dips and breakouts near the r20ma r20ma

PBS Breakout The Micro Trader looks to buy dips at or near the r20ma as long as it is above the 200ma.

200ma

28

2-Minute Scalp Chart Pristine’s Scalp Trading Formula

20ma

Wide Distance*

20ma is rising (r20ma) + r20ma > 200ma = Buy dips and breakouts near the r20ma

200ma *Wide distance between 20ma & 200ma calls for caution

29

Using Candlesticks w/The Pristine Method® Why Use Candlesticks? •

Japanese Candlesticks focus on the relationship between the open and close of a bar, while the Western Bars focus on the close vs. the prior period’s close. Note: As long as the underlying stock closes higher than the prior day’s close, Western thought says it’s positive; however, according to the Japanese view, this is not necessarily the case. If on an up day, the stock closes below its open, the Japanese would regard it as negative.

•

The use of Japanese Candlesticks will help the Pristine Trained Trader (PTT) to determine who won the battle between Supply and Demand which is the most important element of Technical Analysis. Important: We exclusively use candlestick bar charts in our trading analysis in all time frames.

30

Understanding Candlesticks

Determining Who Won The Battle

High

High Close

Open

Open

Close

Low

Bulls Win

Low

Bears Win 31

Understanding Candlesticks Bulls Win

No One Wins

The last group in control has the edge

Bears Win

Bottoming Tail (BT)

Topping Tail (TT)

BT = Buyers have taken control TT = Sellers have taken control

32

A Pristine 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 sharp reversal will often be the price paid for such an abnormal winning streak. 33

3 to 5 Bar Rallies 3 Pictures of Greed Really

Think “Sell”

Really, Really

Think “Sell”

Think “Sell”

Tip: More than 5 up bars sets up the possibility of a climactic decline.

3 Bars Up

4 Bars Up

5 Bars Up 34

3 to 5 Bar Declines 3 Pictures of Fear Tip: More than 5 down bars sets up the possibility of a climactic rally.

Really

Think “Buy” 3 Bars Down

Really, Really

Think “Buy”

Think “Buy”

4 Bars Down

5 Bars Down 35

Count Your Way To Profits 3 Up Bars

4 Up Bars

5 Down Bars

3 Up Bars 5 Down Bars

3 Down Bars

3 Down Bars

Tails

4 Up Bars

Tip: The Weekly Time Frame adheres to Pristine’s Counting Method the best. The sideways trend also yields better than average results with this method.

Chart Courtesy of MasterTrader.com 36

Trading the Pristine Method® The Foundation

www.pristine.com 37

Two Master Keys to Trading Success Introduction to the Pristine Method® of Trading In this section, we will reveal two of Pristine’s Master Trader Keys to understanding how all markets work. The following two concepts form the cornerstone of every one of our sound trading techniques and tactics. After gaining a clear understanding of these two building blocks, the Pristine Trained Trader (PTT) should never again find himself confused and not knowing what to do. In fact, once these two powerful, but simple concepts are understood and mastered, the PTT should rarely find himself on the wrong side of the market. In case you don’t know, 80% of all trading losses can be attributed to being on the wrong side of the market. Let’s begin! 38

The Market’s Basic Unit/Atom – Pristine’s Master Trader Key # 1 Stage 3 Indecision

• The picture you see to the right is the only complete movement a stock or the market can make. There is no other movement possible.

Sell/Short

• The entire life of a stock and/or a market is comprised of this cycle repeated time and time again. • This cycle forms the basis for one’s ability to predict future price movements based on the laws of psychology and probability.

Stage 2 Greed

Stage 4 Fear

• This cycle, sometime referred to as the Basic Unit, helps the PTT know the current status of the stock or market as well as what is likely to occur next. • The key to trading successfully is knowing where you are in the cycle. • This cycle is comprised of four distinct stages, which in turn or ruled by four distinct emotions.

Buy Repeat

Stage 1 Ambivalence

Buy Area

Sell Area 39

The Market’s Basic Unit/Atom – Pristine’s Master Trader Key #1 Stage 3 Indecision

• In Stage 2, the Pristine Trained

Sell/Short

Trader (PTT) focuses on buying most of the time.

• In Stage 4, the Pristine Trained Trader (PTT) focuses on selling/shorting most of the time.

• In Stages 1 & 3, the Pristine Trained Trader (PTT) can focus on both, buying and shorting.

Stage 2 Greed

Stage 4 Fear

• Stage 1 back to Stage 1 can span over decades (macro), or over minutes (micro), depending on the time frame.

• This Cycle/Unit is made up of only three (3) primary trends.

Buy Stage 1 Ambivalence

Buy Area

Stage 1 Ambivalence

Sell Area 40

The Only Way To Win or Lose The Only Way To Win

The Only Way To Lose

Correct Sell Area Faulty Buy Area

Correct Buy Area

Traders who win consistently - no matter what time frame - have simply learned to play the cycle/unit in this manner: They buy somewhere during the start of Stage 2 and sell somewhere before Stage 4 begins.

Faulty Sell Area

Traders who lose unconsciously playing the stock cycle in this faulty manner: They buy somewhere after Stage 2 is proven to all and they sell after it is obvious they were wrong. 41

Full Cycle with a Macro Top Stage 3

Pristine Note: Stage 1s will tend to be narrow and tight, while macro Stage 3s will often be wide and whippy.

Stage 1 = Ambivalence Stage 3 = Indecision

Sell

Wide Bars

Wide Bars

Stage 2

Stage 4 Narrow Bars

Narrow Bars Stage 1

Buy Stage 1

42

The Full Cycle with Macro Top Pristine Note: Stage 1s will tend to be narrow and tight, while macro Stage 3s will often be wide and whippy.

Stage 3

Sell

Stage 1 = Ambivalence Stage 3 = Indecision

Wide Bars

Stage 2

Wide Bars

Stage 4

Narrow Bars

Narrow Bars Stage 1

Buy

Stage 1

43

Full Cycle with Micro V-Top Pristine Note: At times, Stage 3s will be sharp and abrupt. These tops often result in very severe collapses. Wide Bars

Stage 1 = Ambivalence Stage 3 = Indecision

Stage 3

Wide Bars

Stage 2 Stage 4

Narrow Bars

Stage 1

Narrow Bars

Stage 1

44

Full Cycle w/ Micro Topping Tails (TT) Pristine Note: At times, Stage 3s will be sharp and abrupt. These tops often result in very severe collapses.

Stage 3

1 TT produced a 55% decline

2 TTs produced a 95% decline

Wide Bars

Wide Bars

Stage 1 = Ambivalence Stage 3 = Indecision

Stage 2

Stage 4

Narrow Bars Narrow Bars

Stage 1 Stage 1

45

Full Cycle with TT Micro Top Pristine Note: At times, Stage 3s will be sharp and abrupt. These tops often result in very severe collapses.

Stage 3 Wide Bars Stage 2

Stage 1 = Ambivalence Stage 3 = Indecision

Wide Bars

Stage 4 Narrow Bars Stage 1

Narrow Bars Stage 1

46

Full Cycle w/ Deadly Doji Micro Top Pristine Note: At times, Stage 3s will be sharp and abrupt. These tops often result in very severe collapses. Stage 1 = Ambivalence Stage 3 = Indecision

Narrow Bars

Deadly Doji

Stage 3

Wide Bars Wide Bars Stage 2 Stage 4

Narrow Bars Stage 1

Stage 1

47

Stage Transition In Micro Form Is this TT acceptable? This is a topic we discuss in depth in ATS.

Stage 3

Buy Breakout Stage 2

Stage 4

Note: the wide distance from the 20ma at the start of stage 3.

48

Pristine’s Master Trader Key #1 •

There is only one cycle in existence. Stocks and/or the market can do nothing else but repeat this cycle over and over. No other movement is possible. This is the master key to predicting future stock movements. Remember it!

•

This cycle is made up of four (4) distinct stages, which in turn are driven by four (4) distinct emotions or psychological states. The 4 stages must, and always do, occur in the same sequence. This is also an important key to price prediction based on the laws of probability and psychology.

•

Stage 1, the bottoming period, is driven by Ambivalence. This is the stage during which traders are indifferent and largely uninterested in participating. The interest level is low because of the prolonged poor market condition of the preceding Stage 4.

•

Stage 2, the bullish period, is driven by Greed. This is the stage during which traders will make the most money. The mindset that dominates Stage 2 is one that wants to be in the game, at any cost, which is why the ‘Greater Fool’ Theory rules. Most participants will make money during Stage 2, except those who come in too late and/or those who stay too long. 49

Summary of Pristine’s Master Trader Key #1 •

Stage 3, the topping period, is driven by Uncertainty. During this stage, bullish sentiment begins to change, as a growing number of players begin to doubt the stock’s (market’s) ability to continue its upward momentum.

•

Stage 4, the bearish period, is driven entirely by Fear, which typically escalates or crescendos into a climax near the bottom. Most traders will lose money during this stage. Those who have held on too long begin to exit in an attempt to keep some of their gains. Those who have entered late typically exit late; but like a herd, they tend to exit all at once, which in turn creates the climactic part of the decline. Once the last batch of traders exits, the worst is over. More downside may still occur, but the negative momentum will have subsided after the climax.

•

Important: There is only one way to lose. If a trader thoroughly understands the only error that leads to losing, he will be more prone to avoid it.

50

Summary of Pristine Master Trader Key #1 •

A stock, or any market, can only be in one of the 4 stages at any given time. Note: A stock can, however, be in different stages in different times frames.

•

Identifying which stage a stock is in is vital to successful trading. It helps to reduce losing trades, and adds a quality to one’s decision making that is unrivaled. Note: Pristine Trained Traders (PTTs) never place trades without first knowing in which stage those trades are being done.

•

The PTT will make most of his big profits during Stage 2 and Stage 4. Note: Core Trading and Pristine Pyramiding are styles that work best in Stages 2 and 4.

•

Keep in mind that each stage calls for a specific trading strategy. Note: The PTT has Stage 1 tools, Stage 2 tools, Stage 3 tools and Stage 4 tools.

•

All a trader needs to do is learn how to handle himself in each of the 4 stages. Note: The PTT who knows how to handle himself in all 4 stages has about 85% of the market’s activity covered.

•

The PTT trades with the flow of each stage 90%+ of the time. Note: Using the appropriate trading tools and tactics, the PTT only goes against the flow of each stage roughly 10% of the time.

51

The Four Transitional Phases • The 4 stages are divided by or linked by 4 Transitional Phases. • The 4 Transitional phases tend to be the most difficult periods to trade. • The uncertainty of these Transitional Phases tends to produce whippy and erratic moves but also provides some of the most powerful ones! • The highest degree of market mastery will be obtained when the trader learns how to handle the transitional phases as well as the 4 dominant stages. • The entire 4-stage cycle is made up of 3 primary trends.

52

The 3 Primary Trends: Master Trader Key #2 Master Trader Key #2 The price of a stock can only: • Go up, • Go down, or • Go sideways. Note: In reality, there are only two trends. What we refer to as the Sideways Trend is nothing more than a temporary pause or pit stop between the two most dominant trends, the Up Trend and Down Trend. 53

The Pristine Up Trend Defined Up Trend •

Down Trend | Sideways Trend

Defined by 1) higher highs, 2) higher lows, 3) a rising 20-period moving average (r20ma), 4) a rising 40-period moving average (r40ma) and 5) a relatively even space in between the two rMAs. * Higher highs and lows refers to ‘pivots’ being higher

The Up Trend is also known as Stage 2. Trading Tip: Once the above Pristine Up Trend criteria are met, the PTT’s sole objective is to buy every single dip/pullback and breakout in the Stage 2 Up Trend. Not one should ever escape the PTT. = Pristine Buy Opportunity Trading Tip: Scan your Trading Universe and make a list of stocks currently trending in a powerful Stage 2.

54

The Pristine Uptrend Defined E Note: the smooth nature of the r20ma and the r40ma, these are referred to as “railroad tracks.”

Pristine Uptrend Criteria

*All pullbacks are buyable

5

D C

4 3 r20ma

B 2

r40ma

A 1

Even Space

1) Higher Highs (A – E) 2) Higher Lows (1 – 5) 3) Rising 20ma r20ma 4) Rising 40ma r40ma 5) Even space between the 20ma & 40ma (Railroad Track)

ALL PULLBACKS ARE BUYABLE!! 55

The Pristine Uptrend Defined E Pristine Uptrend Criteria

Note: the smooth nature of the r20ma and the r40ma, these are referred to as “railroad tracks.” D *All pullbacks are buyable

5

C

2) Higher Lows (1 – 5)

B 4 3

A 2

r20ma

3) Rising 20ma r20ma 4) Rising 40ma r40ma

r40ma Even Space

1

1) Higher Highs (A – E)

5) Even space between the 20ma & 40ma (Railroad Track) ALL PULLBACKS ARE BUYABLE!! 56

The Pristine Uptrend Defined d

Pristine Uptrend Criteria 1. Higher Highs (a –d) 2. Higher Lows (1 – 3) 3. Rising 20ma (r20ma) 4. Rising 40ma (r40ma) 5. Even space in between *All Pullbacks are Buyable *Breakouts are also Buyable

c b 3

a

2 Even Space

1 r20ma r40ma

57

The Pristine Up Trend Defined d

Pristine Uptrend Criteria c

1. Higher Highs (a –d) 2. Higher Lows (1 – 4) 3. Rising 20ma (r20ma) 4. Rising 40ma (r40ma) 5. Even space in between b

*All Pullbacks are Buyable *Breakouts are also Buyable

4 a

r20ma 3 r40ma 2

1

= Pristine Trading Opportunities

58

Weekly Up Trend D

Pristine Up Trend Criteria 1) Higher Highs (A - D) 2) Higher Lows (1 -4) 3) Rising 20ma (r20ma) 4) Rising 40ma (r40ma) 5) Even Space Between

C

B 4 A

*All Pullbacks Are Buyable

3 Even Space r20ma 2 1

r40ma

59

The Pristine Down Trend Defined Up Trend

Down Trend

Sideways Trend

Defined by 1) lower highs, 2) lower lows, 3) a declining 20-period moving average (d20ma), 4) a declining 40-period moving average (d40ma) and 5) a relatively even space in between the two dMAs. * Lower highs and lows refers to ‘pivots’ being lower *The Down Trend is also known as Stage 4. Trading Tip: Once the Pristine Down Trend criteria are met, the PTT’s sole objective is to short every single rally and breakdown in the Stage 4 Down Trend. Not one should ever escape the PTT.

= Pristine Sell Opportunity Trading Tip: Scan your Trading Universe and make a list of stocks currently trending in a powerful Stage 4. 60

The Pristine Down Trend Defined Stage 3

a

d40ma

b

d20ma Even Space

c

Down Trend Criteria 1. Lower Highs (a – e) 2. Lower Lows (1 – 5) 3. Declining 20ma (d20ma) 4. Declining 40ma (d40ma) 5. Even space in between

d 1

e 2 3

*All Rallies are Shortable *All Breakdowns are Shortable

Stage 4

4 5

61

The Pristine Down Trend Defined

Stage 3 d40ma a d20ma b

Down Trend Criteria 1. Lower Highs (a – e) 2. Lower Lows (1 – 5) 3. Declining 20ma (d20ma) 4. Declining 40ma (d40ma) 5. Even space in between *All Rallies are Shortable *All Breakdowns are Shortable

Even Space

c 1 d e

2 3 Stage 4

4 5

62

The Sideways Trend Defined Up Trend | Down Trend

•

Sideways Trend

Defined by a series of “relatively” equal highs and lows. The Sideways Trend is also known as Stage 1 & Stage 3.

Trading Tip: The PTTs objective is to buy the dips and short the rallies in a Sideways Trend. = Pristine Buy Opportunity = Pristine Sell Opportunity

Note: In a Stage 1, the PTT is more prone to buy the dips than sell the rallies. In a Stage 3, the PTT is more prone to sell the rallies than buy the dips. Why?

63

Sideways Trend A Sideways Trend is defined by a series of relatively equal highs and relatively equal lows.

Stage 2

Note: Every Sideways Trend eventually breaks out or breaks down. In this case, a breakout is what materialized, resulting in a move to a Stage 2 Up Trend.

Notice the Oscillator below. Do we need it?

= Pristine Trading Opportunity

64

Sideways Trend Equal Highs

Stage 3

Equal Lows Stage 2 Equal Highs

Stage 4

A Sideways Trend is defined by a series of relatively equal highs and relatively equal lows.

Equal Lows

Note: Every Sideways Trend eventually breaks out/down A Sideways Trend is defined by a series of relatively equal highs and relatively equal lows.

65

Sideways Trend A Sideways Trend is defined by a series of relatively equal highs and relatively equal lows.

= Pristine Trading Opportunity

66

Combining Master Trader Keys I & II •

There is only one Cycle or movement a stock can make. We call this the Unit or Atom.

•

This Cycle is largely comprised of 4 stages (1, 2, 3 & 4).

•

These 4 stages are made up of 3 primary trends (Up, Down & Sideways).

•

Each trend should have its own matching trading actions.

•

The PTT uses Pristine ESP™ Trend Scans to find the powerful Stage 2 and Stage 4 trends.

Stage 3 Sideways Trend Buy & Short

Guerrilla Mode

Swing/Core Mode

Stage 4 Downtrend Short Rallies & B/Ds

Stage 2 Uptrend Buy Dips & B/Os

Swing/Core Mode

Stage 1 Sideways Trend Buy & Short

Stage 1 Sideways Trend Buy & Short 67

Combining Master Trader Keys I & II Stage 3

Guerrilla Mode

Stage 2

Swing/Core Mode Stage 4

Guerrilla Mode Stage 1

Stage 1 Swing/Core Mode

68

Trading the Pristine Method® Pristine Master Buy and Sell Setups

www.pristine.com 69

Anatomy of an Up trend – Stage 2 Trading Note: m2 represents the periods during

m3

which the minor trends in a Stage 2 match the major or macro trend (no conflict). During the m1s, m3s and m4s, there is no match with the Major Stage 2. Buy Action for the PTT takes place the moment there is a match (no conflict).

m2 m3 m4 Match

m2

m3

m1 m4 Match

m2 m1 Tip: TTs and BTs are examples of m1s and m3s Match

m = Minor

Macro Bullish Stage 2 70

Anatomy of an Up trend – Stage 2 Important Points

Pristine Trading Tip:

•

Note that the macro up trend is made up of a series of repetitive micro stock cycles (atoms).

•

•

Pristine Trained Traders (PTTs) look to buy every dip/pullback and breakout in macro Stage 2 up trends. The question is not “if” to buy, but “when” to buy the dip/pullback or breakout.

•

While the higher peaks and troughs signify that the stock is in a “Macro” Stage 2, note that the macro up trend itself has micro stage 1s, 2s, 3s & 4s.

Pristine Trained Trader (PTTs) buy when the Micro Trend is in sync with the Macro Trend. Herein lies one of the master keys to trading accuracy on the buy side. The question of “when” to buy is now answered. A buy is triggered each time there is a stage to stage “MATCH.” Don’t Miss This Concept. It Is Priceless! 3

2

Micro Trends 3

2 4

2

4 1

1 Macro Stage 2 Up Trend

71

Anatomy of an Up trend – Stage 2 • The timing of the ‘buy’ develops as follows: 1)

Macro Stage 2 with a micro Stage 3 (Wait!)

2)

Macro Stage 2 with a micro Stage 4 (Wait!)

3)

Macro Stage 2 with a micro Stage 1 (Get Ready!)

4)

Macro Stage 2 with a micro Stage 2 (STRIKE!)

3

Micro Stages

2

3 2

2 4 Strike

4

1

Note: An example of a micro stage 3 could be a TT and an example of a micro stage 1 could be a BT.

Strike

1 Macro Stage 2

72

The Pristine Buy Set-up (PBS) 20-pts 3

20 points

4 2

PBS 1

•

The Pristine Buy Set-up (PBS) is made up of only one key criterion.

•

The PBS is the key to capturing robust 3 to 5-bar trading gains.

•

The PTT can often use this one setup alone to trade any market.

•

The PBS is scored 20 points in the Pristine Trade Score System.

•

The PBS can be found and traded in all times frames. 73

Pristine Buy Set-up (PBS) 20-pts The Setup

The Action

•

Main Criteria: 3 or more consecutive lower highs or 3 or more red bars. Tip: Having both makes the set-up more potent.

•

Optional Item:

3 or more consecutive lower lows 3 LH 4 3 or more red bars with lower highs.

LH LH = Lower High

2

LH

LL = Lower Low LL LL 1 74

Pristine Buy Setup’s 4 Action Steps The Setup

1.

2. 3. 4.

The Action

Buy when the stock trades above the prior bar’s high, or Buy when the stock trades above its first 30-minute high (Only for Swing Entries). Note: Only use the 30-minute entry method if the prior bar’s high is too far away (Swing Entries). Place a stop below the entry bar’s low, or the prior bar’s low, whichever is lower. Establish the minimum target at or slightly above the prior pivot high. After two bars (in your direction) are complete, place a trailing stop under each prior low until a) the price objective is met, b) a reversal bar has developed or c) a gap up has occurred (Swing Trades). 4 = Trade Management

Objective

3

Buy $0.01 above the prior bar’s high. Stop loss slightly below the current or prior bar’s low.

1

2 75

This dated chart shows a near perfect Pristine Buy Set-up (PBS). The Green Arrows point to the buy bars. The Red Line signifies where the PTT places his stop.

Buy Area

Pristine Buy Set-up (PBS) 1) 3 consecutive lower highs. 2) 3 consecutive dark bars 3) 3 consecutive lower lows Pristine Breakout (PBO) The second buy point is based on Pristine Breakout Principles, which we cover in more detail later in the course.

Stop Loss

Stop Loss

76

Pristine Buy Set-up (PBS) 20-pts PBS Action Steps 1. Buy above the prior bar’s high 2. Place stop below the prior bar’s low or 2a. Place stop below the current bar’s low 3. Set minimum target at the prior pivot high 4. Manage in between the stop and target

Target Area

B S

PBS Criteria 3 or more lower highs or… 3 or more red bars 3 or more lower lows (Optional)

77

Anatomy of a Downtrend – Stage 4 Trading Note: m4 represents the periods during which the minor trends in a Stage 4 match the major or macro trend (no conflict). During the m1s, m2s and m3s, there is no match with the Macro Stage 4. Sell Action for the PTT takes place the moment there is a match (no conflict).

Match

m4

m3 m2 m1

Match

m4 m3 m2 Match

Tip: TTs and BTs are examples of m1s and m3s.

m1

m4

m = Minor

m1

Macro Bearish Stage 4

78

The Anatomy of a Downtrend – Stage 4 Important Points

Pristine Trading Tip: •

•

Note that the macro down trend is made up of a series of repetitive micro stock cycles (Atoms).

•

Pristine Trained Traders (PTTs) look to can sell short every rally and breakdown in macro Stage 4 down trends. The question is not “if” to short, but “when” to short the rally (breakdown).

•

While the lower highs and lows signify that the stock is in a “Macro” Stage 4, note that the macro down trend itself has micro stage 1s, 2s, 3s & 4s.

Pristine Trained Traders (PTTs) short when the Micro Trend is in sync with the Macro Trend. Herein lies one of the master keys to trading accuracy on the sell side. The question of “when” to sell/short is now answered. A short is triggered each time there is a stage to stage “MATCH.” Don’t Miss This Concept. It Is Priceless! 3

4

Micro Trends

2 4 1

2

3 4

1 Macro Stage 4 Down Trend

79

Anatomy of a Downtrend – Stage 4 • The timing of the short setup develops as follows: 1) Macro Stage 4 with a micro Stage 1 (Wait!) 2) Macro Stage 4 with a micro Stage 2 (Wait!) 3) Macro Stage 4 with a micro Stage 3 (Get Ready!) 4) Macro Stage 4 with a micro Stage 4 (STRIKE!) Micro Stages

3

4

Strike

2

3

4 1

2

Strike

Note: An example of a micro Stage 3 could be a TT and an example of a micro Stage 1 could be a BT.

4 1

Macro Stage 4

80

The Pristine Sell Set-up (PSS) 20-pts 3 2

20 points

PSS

4 1

•

The Pristine Sell Set-up (PSS) is made up of only one key criterion.

•

The PSS is the key to capturing robust 3 to 5-bar trading gains.

•

The PTT can often use this one setup alone to short any market.

•

The PSS is scored 20 points in the Pristine Trade Score System.

•

The PSS can be found and traded in all times frames. 81

Pristine Sell Set-up (PSS) 20-pts The Setup

The Action

Main Criteria: 3 or more consecutive higher lows or 3 or more green bars. Tip: Having both makes the set-up more potent. Optional Item:

3 or more consecutive higher highs

3 2 HH HH

4

HL HL

HL = Higher Low

3 or more green bars with higher lows.

HL

HH = Higher High 1

82

Pristine Sell Setup (PSS) 20-pts The Setup

The Action

1) Short when the stock trades below the prior bar’s low, or Short when the stock trades below its first 30-minute low (Only for Swing Entries). Note: Only use the 30-minute entry method if the prior bar’s low is too far away (Swing Entries).

2) Place a stop above the entry bar’s high, or the prior bar’s high, whichever is higher. Traders can use the entry bar’s high but the trade’s favorable odds are reduced a bit. 3) Establish the minimum target at or slightly below the prior pivot low. 4) After two bars (in your direction) are complete, place a trailing stop above each prior high until a) the objective is met, b) a reversal bar develops or c) a gap down has occurred (Swing Trades). Stop loss slightly above the current or prior bar’s high. Short $0.01 below the prior bar’s low.

4

2

1

= Trade Management Objective

3

83

Pristine Sell Set-up (PSS) 20-pts 200ma

20ma PSS Criteria 3 or more higher lows 3 or more green bars 3 or more higher highs

S

PSS Entry

Note: The flip to red (-COG) signifies a Micro Stage 3

PSS Action Steps 1. Short below the prior bar’s low 2. Place stop above the prior bar’s high or 2a. Place stop above the current bar’s high 3. Set minimum target at the prior pivot low 4. Manage in between the stop and target

Target Area

84

Pristine Sell Set-up (PSS) 20-pts PSS Criteria 3 or more higher lows or 3 or more green bars 3 or more higher highs (optional) Note: Only the first criterion is required The TT signifies a micro stage 3

Stop PSS Entry

PSS Action Steps 1. Short below the prior bar’s low 2. Place stop above the prior bar’s high or 2a. Place stop above the current bar’s high 3. Set minimum target at the prior pivot low 4. Manage in between the stop and target

Target Area

85

Trading the Pristine Method® Pristine Trading Combos for Stages 2 & 4

www.pristine.com 86

Pristine Trading Combinations for Stages 2 & 4

Introduction In this section, we show the trader how to combine the Pristine Buy Set-up (PBS) and the Pristine Sell Set-up (PSS) with several powerful occurrences that dramatically increase the trader’s odds of success in stages 2 and 4. Individually, the Pristine Buy and Sell Set-ups tend to reap profits while ensuring that the trader plays on the right side of professional market makers and specialists. However, The Pristine Buy & Sell Setups, used in conjunction with the following events (amplifiers), will actually help to raise the level of accuracy of these already accurate patterns, and typically generate trading profits at a faster and more powerful rate. Trading truly becomes closer to a science once one knows how to properly identify and exploit the moments when these powerful trading events occur simultaneously. Now we are going to delve deeper into the realm of professionalism, showing how the Pristine Buy & Sell Setups along with several other indicators and occurrences can reap bigger profits. Keep in mind that each concept can be applied in all time frames. 87

Bottoming Tail (BT) & Topping Tail (TT) 10-pts Bottoming Tail (BT) & Topping Tail (TT) Points A Bottoming Tail (BT) after a 3 to 5 bar decline indicates that the balance of power has shifted from the sellers back to the buyers. Example: “Red bar, Red bar, Red bar, Bottoming Tail (BT).” The PTT looks to buy! A Topping Tail (TT) after a 3 to 5 bar rally indicates that the balance of power has shifted from the buyers back to the sellers. Example: “Green bar, Green bar, Green bar, Topping Tail (TT).” The PTT looks to sell! TT

PBS 30-pts PSS 30-pts BT 88

Pristine Buy Setup (PBS) with a BT - 30pts The PBS combined with the formation of a Bottoming Tail (BT) is our first trading combination, and it presents a powerful buy opportunity that is more reliable than a regular PBS without a BT.

Pristine Buy Setup (PBS)

Bottoming Tail (BT)

+

Result

=

A more reliable buy opportunity

BT

20 pts

10 pts

30 pts

Pristine Trading Combo 1 89

Bottoming Tail & Topping Tail (TT) - 10pts The Setup

The Action

The 1st Criterion: A Pristine Buy/Sell Setup and The 2nd Criterion: A Bottoming/Topping Tail

30 pts

Topping Tail (TT)

PSS

PBS Bottoming Tail (BT) 30 pts 90

The PBS & Bottoming Tail (BT) The Setup

The Action

Buy above the high of the BT bar and follow the normal Pristine stop, trade management and sell rules.

Target Area 30 pts

PBS Buy $0.01 above the prior high.

Stop loss slightly below the entry bar’s low.

BT

*Reverse for the Pristine Sell Set-up (PSS) with a TT 91

PBS w/ BT (30-pts) PBS w/ BT Action Steps 1. Buy above the BT’s high 2. Place stop below the prior bar’s low or 2a. Place stop below the BT’s low 3. Set minimum target at the prior pivot high 4. Manage in between the stop and target

Target Area

B S

PBS w/ BT Criteria 3 or more lower highs or 3 or more red bars 3 or more lower lows (Optional) Bottoming Tail (BT)

BT

Note: The BT signifies a Micro Stage 1

PBS = 20-pts BT = 10-pts Total = 30-pts

92

Bottoming Tails (BT)

PBS w/ BT

BT 20ma BT BT BT

+Vol

93

Bottoming Tail (BT) 10 pts Bottoming Tails (BT) are signs that major institutionalized buying has taken place. When BTs form after a stock has already declined several bars, the odds are pretty high that a bounce of some kind is very close at hand.

TT

MS

BT

94

Changing of the Guard (COG) 10-pts

Pristine’s “Changing of the Guard” (COG), our second trading combination, is the name we have given to a multi-bar pattern that signifies that a clear shift in the balance of power has just occurred. There are two types of COGs. The Bullish COG (+COG) signifies that a change in control from the sellers to the buyers has just occurred. The Bearish COG (-COG) signifies that a change in control from the buyers to the sellers has just occurred. Before we show the potency of this price pattern, when it is combined with the Pristine Buy and Sell Set-ups, it is necessary for us to explain the powerful reasoning behind it.

95

Changing of the Guard (COG) 10-pts Pristine Tip: Each time a stock closes above its opening price, the buyers are considered to have won the particular period (bar) at hand. Each time a stock closes below its opening price, the sellers are regarded as the winners of that period (bar). The following formulas will demonstrate this clearly. Close > Open = Buyers/Bulls Won the Period (bar) Close < Open = Sellers/Bears Won the Period (bar)

Close

Open

Open

Close

Bulls/Buyers Won

Bears/Sellers Won 96

Changing of the Guard (COG) 10-pts Important COG Points: A Bullish COG (+COG) occurs when 3 to 5 consecutive red bars are suddenly followed by a green bar. Example: “Red bar, Red bar, Red bar, GREEN bar.”

PBS 30-pts

+COG

A Bearish COG (-COG) occurs when 3 to 5 consecutive green bars are suddenly followed by a red bar. Example: “Green bar, Green bar, Green bar, RED bar.” PSS 30-pts

-COG

97

Pristine Buy Setup (PBS) with a +COG - 30pts The PBS combined with the formation of a Bullish COG (+COG) is our second trading combination and presents a powerful buy opportunity that is more reliable than the regular PBS without a +COG.

Pristine Buy Setup (PBS)

Bullish COG

Result

Close

+

=

A more reliable buy opportunity

Open

20 pts

Reverse for the PSS

10 pts

30 pts

Pristine Trading Combo 2 98

PBS & PSS with a COG The Setup

The Action

The 1st Criterion: A Pristine Buy/Sell Setup and The 2nd Criterion: A Bullish/Bearish COG Bearish COG (-COG) w/ TT

PSS PBS

How many points? Bullish COG (+COG )w/ BT 99

The PBS & Bullish Changing of the Guard (+COG) The Setup

The Action*

Buy above the high of the +COG and follow the Pristine stop, trade management and sell rules.

Target Area 30 pts

PBS Buy $0.01 above the +COG

Stop loss slightly below the entry or prior bar’s low.

+COG

*Reverse for the Pristine Sell Set-up (PSS) with a –COG 100

PBS w/ +COG (30-pts) PBS w/ +COG Criteria 3 or more lower highs 3 or more red bars 3 or more lower lows +COG Note: The +COG signifies a Micro Stage 1

PBS w/ +COG Action Steps 1. Buy above the +COG’s high 2. Place stop below the prior bar’s low or 2a. Place stop below the +COG’s low 3. Set minimum target at the prior pivot high 4. Manage in between the stop and target

Stage 2

B

Stage 4

S

Stage 1

e

Quiet Volume

ing s i R

m olu

V

101

PBS +COG (30-pts) Target Area PBS w/ +COG & BT Action Steps 1. Buy above the +COG’s high 2. Place stop below the prior bar’s low or 2a. Place stop below the +COG’s low 3. Set minimum target at the prior pivot high 4. Manage in between the stop and target

B S

Note: ATS teaches other options for position management.

PBS = 20-pts +COG = 10-pts Total = 30-pts

PBS w/ +COG Criteria 3 or more lower highs 3 or more red bars 3 or more lower lows +COG Note: The +COG signifies a strong Micro Stage 1

102

Pristine Pop Quiz

20ma Find & Circle: 40ma PG

1) Three +COG 2) One PBO 3) All PBS’s

103

Narrow Range Bar/Body – (NRB/NB) 10-pts • • • • • •

Narrow Range Bars (NRBs) are defined as bars with a smaller than average distance between the high of the bar and low of the bar. Narrow Bodies (NBs) are defined as bars with a smaller than average distance between the open and close of the bar. NRBs and NBs are only significant if and when they appear after several bar moves. NRBs and NBs offer one of the clearest possible signs that a reversal is near. An NRB or NB after a 3-5 bar drop indicates a rally is potentially close at hand. An NRB or NB after a 3-5 bar rally indicates a decline is potentially close at hand.

Normal Range Bars

NRB = 10-pts NB = 10-pts

Narrow Range Bars NRBs

Narrow Bodies (NBs)

Pristine Trading Tip: Reversals (rebounds or declines) after NRBs & NBs tend to be more potent and reliable than reversals from more normal daily bars.

104

Pristine Buy Setup (PBS) & NRB/NB (30pts) The Pristine Buy Setup (PBS) combined with the formation of a NRB or a NB presents a near perfect buy opportunity that is far more reliable than the regular PBS without the amplifier(s). Pristine Buy Setup (PBS)

NRB/NB

+

20-pts

Result

=

10-pts

Pristine Trading Combo 3

Near perfect buy opportunity

30-pts

105

The PBS & Narrow Range Bar – (NRB) The Setup

The Action

The 1st Criterion: A Pristine Buy Setup (PBS) and The 2nd Criterion: A NRB or NB

Version 1 Green NRB

40-pts

Version 2 Red NRB

30-pts

Version 1 Green NB

40-pts

Version 2 Red NB

30-pts

More than one NRB or NB after a PBS is also powerful, and it is acceptable if the NRB or NB occurs on the 3rd bar of the PBS. 106

Pristine Buy Set-up (PBS) & NRB/NB The Setup

The Action

Buy above the high of the NRB/NB and follow the Pristine stop, trade management and sell rules.

Target Area 40 pts

PBS

Buy $0.01 above the prior bar’s high. Stop loss slightly below the current or prior bar’s low.

NRB/ +COG

*Reverse for the Pristine Sell Set-up (PSS) with a NRB

107

Narrow Range Bar (NRB) 10-pts Target B

PBS w/ +COG & NRB = 40pts

S

20ma 40ma

108

Narrow Range Bar (NRB) 10pts

200ma

20ma

S

PSS/TT/-COG/NRB Entry

PSS w/ TT, -COG & NRB = 50 pts*

Minimum Target

*This play is really 90 points, which you will see once we first cover more Pristine Trading Combos

109

Narrow Range Bars & Narrow Bodies PBS w/ NRBs and NBs Target

B S Pristine Breakout (PBO)

PBS

110

Narrow Range Bars & Narrow Bodies TT

Circles = NB or NRB PG = Pro Gap

PG

TT/ -COG NB NB

NB

PBS BT

NBs

NB

NRB

200ma

+COG

Note: the rallies that originate near the 200ma are particularly robust

BT

111

Power of Narrow Range Bars m3 m3

NBs m3 m4

TT m2

m4

m2

m4 m2

BT m1

PG

NBs m1

NBs m1

e2

m1

Ma

ag t S o cr

m = Micro PG = Pro Gap

112

Above Average Volume (+Vol) 10-pts • Volume is one of the most valuable keys to predicting price reversals. • Mastering the art of reading price/volume relationships will allow you to pick tops and bottoms in stocks with above average accuracy. • The truly astute trader can trade successfully by relying exclusively on price and volume. • There are three types of Volume: • Novice typically ends the current move. • Pro typically ignites a brand new move. • Continuation which typically leads to the continuation of the most recent move. Pristine’s #1 Volume Rule Above average volume, “after” a strong up or down move, indicates that a near-term price reversal is at hand. 113

PBS/PSS w/ +Vol (Trading Combo 4) NRB/ -COG

PSS

PBS NRB/ +COG

What is needed to make these plays 60-pts?

+Vol

What kind of Volume is this? 50-pts

50-pts

Important Points: By now traders should know both the PBS and PSS intimately. They will not be repeated from this point onward. Refer to earlier sections for the details. Note: the above examples really combine four concepts: the PBS/PSS, the NRB, COG and the Above Average Volume (+Vol). A very powerful combination. 114

Novice Buy Volume

Pristine Tip: The above scenarios become incredibly potent reversals if they occur at or near potential turning areas, such as downward trendlines, major and/or minor price resistance, or declining moving averages. If any one of the above advances is merely a first pullback after a sharp breakdown or a counter rally in a strong downtrend, it will possess a more compelling reason to decline. Note: The key to trading accuracy is finding points at which numerous concepts converge. 115

Novice Sell Volume

Pristine Tip: The above scenarios become incredibly potent reversals if they occur at or near potential turning areas, such as upward trendlines, major and/or minor price support, or rising moving averages. Remember, Novice Volume ends the current move. The volume can come on the last bar of the decline or on the bar or two before the last bar. Note: The key to trading accuracy is finding points at which numerous concepts converge. 116

Pro Volume

Pristine Tip: The above scenarios become incredibly potent reversals if they occur at or near potential turning areas, such as upward or trendlines, major and/or minor price support or resistance, or rising/declining moving averages. Remember, Pro Volume ignites a brand new move or direction in a stock. Note: The key to trading accuracy is finding points at which numerous concepts converge. 117

Pro & Continuation Volume Examples A

Contin

uation

Volum

e

B

These two scenarios, A & B, show volume which ignites a new move or trend. As you now know, certain types of volume end current moves (novice). Other types of volume ignite a brand new move (pro), and yet another continues the most recent move. The Pristine Trained Trader needs to know how to determine the difference between these three types. Shows Support Shows Resistance

Normal Volume

Tip: Continuation volume typically occurs during pauses. See ex. A. 118

Above Average Volume (+Vol)

A pick up in volume “after” a multi-bar decline or rally will tend to end the current move, if only temporarily. Stage 2 An increase in volume on a Pristine Breakout (PBO) confirms the increase in demand during the break.

PBO

Stage 4

CBS +Vol

Stage 1 +Vol

119

Above Average Volume (+Vol) A pick up in volume “after” a multi-day decline or rally will tend to end the current move, if only temporarily.

Pro Gap This volume climax indicates that most of the sellers have already rid themselves of the stock.

120

Above Average Volume (+Vol)

PSS

PBS

Notice how the +Vol halts the decline in short order. Can you name this Pristine Buy Opportunity? If not, you soon will be able to.

+Vol

+Vol

121

Above Average Volume (+Vol) A pick up in volume “after” a multi-bar decline or rally will tend to end the current move, if only temporarily.

Stage 2

Stage 4

This volume climax indicates that most of the sellers have already rid themselves of the stock. +Vol

Stage 1

The decline is over, as the +Vol indicated +Vol

122

Above Average Volume (+Vol) This volume climax indicates that most of the buyers have already committed to the stock. In other words, the buyers already bought.

TT

This move is over!

A pick up in volume “after” a multi-bar rally will tend to end the current move, if only temporarily. +Vol

123

Minor Price Support (mS) & Resistance (mR)

“Major” price support and resistance, as we will review shortly, exists when there are two or more reference points (prior lows/highs) in the context of a sideways price pattern. In this case, Low revisits low or high revisits high. “Minor” Price Support (mS) and Resistance (mR) exists when a low revisits a prior high (mS) and a high revisits a prior low (mR) respectively. This concept of minor price support and resistance can offer some important entry clues to the Pristine Trained Trader. It also serves as the basis for increased trading accuracy.

Pristine Tip: Minor Support (mS) & Resistance (mR) areas offer the trader excellent entry points. Learning to identify them will help the PTT anticipate when pullbacks in up trends and rallies in downtrends have good odds of halting.

124

Minor Price Support (mS) 10-pts Minor Support (mS): Is a price level or area that lies just above the prior high (peak) of a steady up trend. The basis for this support lies in the fact that resistance, once broken to the upside, often becomes support. Each prior high in an up trend is considered to be an area of minor resistance. Once the stock breaks above its prior high, that peak will often serve as minor support on dips, just as a ceiling once broken through to the upside becomes the floor.

Prior Resistance turns into Support

125

Minor Price Resistance (mR) 10-pts Minor Resistance (mR): Is a price level or area that lies just below the prior low (bottom) of a steady downtrend. The basis for this resistance lies in the fact that support, once broken to the downside, often becomes resistance. Each prior low in a downtrend is considered to be minor support. Once the stock breaks below its prior low, that trough will often serve as minor resistance on rallies, just as a floor, once broken to the downside, becomes the ceiling.

Prior Support turns into Resistance

126

Minor Price Support (mS) & Resistance (mR) The Pristine Sell Setup & Minor Price Resistance

The Pristine Buy Setup & Minor Price Support

3

PSS at Minor Resistance

Minor Support 2 3 4 2 PBS at Minor Support

Minor Resistance

1

Trading Combo 5 127

Minor Price Support (mS) 10-pts Note: The prior high in an up trend becomes mS once the high is exceeded

Minor Support (mS)

PBS

Minor Support (mS)

PBO PBS & Retest

+Vol

128

Minor Support (mS) 10-pts

PBO Note: The prior high in an up trend becomes mS once the high is exceeded, even if and when bases form.

200ma mS Area

Stop r20ma

mS Area

PBS

3:00 ET

129

Minor Resistance (mR) 10-pts

Prior Support Area is now mR PSS Note: The prior support area in this breakdown (the base) becomes mR once the low is penetrated.

130

Minor Price Resistance (mR) PSS/TT/-COG/NRB/mR = 60-pts

20ma

Minor Price Resistance (mR)

Pro +Vol Novice +Vol

131

40% to 60% Retracement (40/60) 10-pts Retracement Levels: The concept of retracements is another important key that helps unlock the door to predicting where price movements are likely to end. It also serves as an excellent way to pick low risk entry points. Retracements allow the PTT to know where price turns might occur. They also serve as a way to measure just how strong the preceding move was and just how strong the next move is likely to be. Most importantly, retracements keep the trader’s expectations in check. They prevent the trader from projecting his hopes and fears into his expectations of the next move. In other words, retracements help keep the trader objective.

The Halfway (50%) Mark: While there are numerous retracement levels that have gained mass popularity over the years, we have our traders focus primarily on the 50% retracement level, which is by far the most prevalent of them all. Because it is dangerous to demand or require the market be too precise, we focus on the range or zone that covers the 40% to 60% area, rather than the pinpoint 50% spot. This is a “location” concept and provides the basis for trading combination number six (6).

Trading Combo 6 132

Bullish 40%-60% Retracement (+40/60) 10-pts

Bullish 40%-60% Retracement (+40/60) In its most basic form, a bullish retracement is a downward price move in the exact opposite direction of the most recent up move. For example, if a stock advances $4, then pulls back by $2, it has experienced a 50% retracement. If the stock were to pull back the entire $4, it is said to have experienced a 100% retracement, which potentially sets up what is called a Double Bottom (2b). Target

$40

Pristine Tip: $4 $38

Target

50% 40/60 Area

$36

2b

100%

Any rebound from the +40/60 range is to be considered more potent than one from another percent level.

Trading Combo 6 133

Bearish 40%-60% Retracement (-40/60) 10-pts

Bearish 40%-60% Retracement (-40/60) In its most basic form, a bearish retracement is an upward price move in the exact opposite direction of the most recent down move. For example, if a stock declines $4, then rallies back by $2, it has experienced a 50% retracement. If the stock were to rally back the entire $4, it is said to have experienced a 100% retracement, which potentially sets up what is called a Double Top (2t). 2t

$40

100%

Pristine Tip: 40/60 Area $38

50%

Target

$4

$36

Target

Any decline from the -40/60 range is to be considered more powerful than one from another percent level.

Trading Combo 6 134

The 40/60 Retracement (40/60) 10-pts Pristine Tip: On many occasions, the 40/60% retracement level will coincide with minor support (mS). If and when this happens, the potential potency and reliability of the play rise. The same is true in reverse for stocks in a downtrend.

mS

mS mS

40/60

40/60

r40ma 40/60

r20ma

135

The 40/60 Retracement (40/60) Sell Area

Pristine Tip: On many occasions, the 40/60% retracement level will coincide with minor support (mS). If and when this happens, the potential potency and reliability of the play rises. The reverse is true for stocks in a downtrend.

mS

40/60

r20ma r40ma

136

The Mighty Moving Average (10-pts) The Moving Average is the best Trend Following tool in existence

There are five dominant moving averages (MA): 1. 10-period simple MA

> This is a short-term MA.

2. 20-period simple MA

> This is a short- to intermediate-term MA (major).

3. 40-period simple MA

> This is an intermediate MA (major).

4. 100-period simple MA > This is an intermediate- to long-term MA. 5. 200-period simple MA > This is a long-term MA. The short-term trader will predominately use the 20 & 40 MAs for monthly, weekly and daily time frames. The 20 and 200 MAs are used in combination for all micro time frames. We call the 20, 40 & 200 MAs the “major” MAs. 137

The Mighty Moving Average (10-pts) Key Moving Average (MA) Concepts 1. Rising “major” MAs represent positive market action or strength.

2. Falling “major” MAs represent negative market action or weakness. 3. The sharper the slopes of the “major” MAs, the stronger/weaker the trend. 4. As long as a stock remains above its “major” MAs (Except Climactic), its action is bullish. 5. During a strong Stage 2, retracements tend to halt near their rising MAs (ex. 20,40). 6. During a strong Stage 4, rallies tend to halt at or near their declining MAs (ex. 20,40). 7. Following penetrations of MAs, pullbacks to the broken MA are very likely. 8. Moving Averages are superior tools In stages 2 and 4. 9. In Stages 1 and 3, their importance is greatly minimized. *The 20ma is the most dominant MA and is used by the PTT on all time frames. 138

The PBS & the Rising 20MA (r20ma) •

The PBS combined with a “bullish” (rising) MA is one of the most powerful Pristine Trading combinations in existence. In our view, there’s no other “combo” more accurate and reliable. Learn it!

•

This powerful buy “combo” represents the core of the Pristine Trained Trader’s focus for longs.

•

Traders who spend the majority of their time mastering this one tactic will dramatically increase their odds of becoming a master trader. This is THE one!

•

At times, when the trend is extremely strong, the 10ma will be the one to focus on, but this state usually does not last long.

PBS/+COG/BT/+Vol/mS/40-60/r20ma = 80 pts

r20ma

Trading Combo 7 139

The Mighty r20ma Uptrend Criteria: 1. Higher Highs 2. Higher Lows 3. Rising 20ma (r20ma) 4. Rising 40ma (r40ma) 5. Even space in between All Pullbacks are Buyable Breakouts are also Buyable

Note: how powerful the r20ma proves to be.

mS

r20ma r40ma

140

Pristine Buy Set-up (PBS) @ r20ma Target Area Play Analysis: PBS (20 pts) +COG (10 pts) r20ma (10 pts)

PBO

r20ma

40-pt Play r40ma

141

Weekly 20ma Play

40ma 1st indication of a trend change. ATS delves deeply into pivots for trend analysis

20ma

Stage 4 MR Stage 1

PBS

142

15-min PBS @ r20ma PBS/BT/mS/40-60/r20ma/RT = 70-pts

Stage 2 Target Area

Buy mS Area

Stop

Stage 4

200ma

Stage 1

143

2-min PBS @ r20ma PBS/NRB/mS/40-60/20ma/RT = 70-pts Sell Area Action Steps: Buy above prior bar’s high Place stop below prior low Sell based on: - Prior High -Trailing stop (after 2 bars).

Sell Area mS Area

r20ma

144

Rating The Quality of a PBS ➢

➢

Each new bar’s open is in the area of the prior bar’s close. They do not overlap or gap into the prior bar.

4 Bars, Supply IS increasing, Caution! Strength, Buy PBS

PBS at Minor Support

145

The PSS & the Declining 20ma (d20ma) •

The PSS combined with a “bearish” (declining) MA is one of the most powerful Pristine Trading Combinations in existence. In our view, there’s no other “combo” more accurate and reliable. Learn it!

•

This powerful sell “combo” represents the core of the Pristine Trained Trader’s focus for shorts.

•

Traders who spend the majority of their time mastering this one tactic will dramatically increase their odds of becoming a master trader. This is THE one!

•

At times, when the trend is extremely strong, the d10ma will be the one to focus on, but this state usually does not last long.

PSS/-COG/TT/+Vol/mR/40-60/d20ma = 80pts

d20ma

Trading Combo 7 146

d20ma Resistance

d40ma

mR

d20ma

Until the d20ma begins to flatten out a bit, it will be a dominant area of resistance when sloping down.

147

Micro PSS @ d20ma 200ma

20ma Stop

Scoring PSS (20 pts.) TT (10 pts.) NRB (10 pts.) -COG (10 pts.) mR (10 pts.) 40/60 (10 pts.) d20ma (10 pts.) RT (10 pts.)

PSS Entry

mR Area

=

90 Point Play Target Area

148

15-Minute PBS @ r20ma

20ma mS Score the circled PBS Play 1. PBS 20 pts 2. ________ _______ 3. ________ _______ 4. ________ _______ 5. ________ _______ 6. ________ _______ 7. 12:00 RT 10 pts._

200ma

Total Score: _______

149

Pristine Trading Quiz Rate This Play PBS (20 pts) ____ ______ ____ ______ ____ ______ ____ ______

PBS

Pop Quiz What stage is the stock in? What is the likely next direction? Find and circle another PBS

150

20ma & 200ma Intra-day Power A famous Chinese proverb says, “a picture is worth a 1000 words.” This one had the potential to be worth a few $1000 for those who knew how to read the Pristine Trading concepts that appeared so clearly. The 200ma and the 20ma in this chart show why they command huge respect in all time frames.

20ma 200ma

151

Pristine’s Buy and Sell Zones Below you will find a very valuable trading technique that Pristine developed more than 10 years ago. This one trading concept is so potent that it should earn an immediate and permanent place in your trading arsenal. It was discovered on the heels of many personal losses, but fortunately for those learning the Pristine Method® of Trading today, it need not be associated with such negative experiences. We hope it proves as profitable for you as it has been to us.

Introduction: While the 20ma is undeniably one of the most potent moving averages in existence, there are still many occasions on which stocks will break it. We discovered that when the mighty 20ma is violated, a rebound of even bigger proportions can and often does materialize. This paradoxical discovery is what lead us to the development of:

The Pristine Buy Zone™ (PBZ) and

The Pristine Sell Zone™ (PSZ) Let’s study these concepts now!

Trading Combo 8 152

Pristine Buy Zone™ (PBZ) 10-pts

The Pristine Buy Zone™ (PBZ) The area between a rising 20MA and a rising 40MA is what we call the PBZ.

20MA

40MA

If a stock is in a very strong uptrend, meeting the requirements of a solid Stage 2, it is a bullish buy if and when it pulls back toward the 20ma. But this Pristine Trading Concept also dictates that it is even a more powerful buy if the pullback slips into the Pristine Buy Zone™. We have found that the rallies that ensue from the PBZ are not only more powerful than those that rise off the r20MA, but they occur faster. 153

Pristine Sell Zone™ (PSZ) 10-pts

The Pristine Sell Zone™ (PSZ)

The area between a declining 20MA and a declining 40MA is what we call the PSZ. 40MA

20MA

If a stock is in a very strong downtrend, meeting the requirements of a solid Stage 4, it is an excellent short if and when it rallies back toward the d20ma. But this Pristine Trading Concept also dictates that it is even a more powerful short if the rally back happens to slip into the Pristine Sell Zone™. We have found that the declines that ensue from the PSZ are not only more powerful than those that decline off the d20MA, but they occur faster. 154

The PBS in the PBZ •

The PBZ acts as a very powerful “cushion” when a stock is in the midst of a strong Stage 2.

•

The snap back that often occurs is typically very sharp because the stock at that point has become deeply oversold.

•

The Circles show the pivot in the Pristine Buy Zone™ (PBZ).

20MA

40MA

Important Points: • •

Once again, the above “buy” scenario shows a number of concepts, all converging to signal a terrific long opportunity: PBS, BT, NB, +Vol, mS, 40/60, +COG and the PBZ™. We have found that the rally which ensues from the PBZ may falter in the area of the prior high. This is where the trader may want to think about taking profits. The use of the 40/60 Sell Rule also comes in handy with this concept. 155

The PSS in the PSZ •

The PSZ acts as a very powerful “ceiling” when a stock is in the midst of a strong Stage 4.

•

The snap back to the downside that often occurs is typically very sharp because the stock has become very overbought.

•

The Circles show the pivot in the Pristine Sell Zone™ (PSZ).

20MA

40MA

Important Points: • •

Once again, the above “sell” scenario shows a number of concepts, all converging to signal a terrific short opportunity: PSS, TT, -COG, NB, +Vol, mR, 40/60, and the PSZ™. We have found that the decline which ensues from the PSZ may falter in the area of the prior low. This is where the trader may want to consider taking profits. The use of the 40/60 Sell Rule also comes in handy with this concept. 156

Pristine Buy Zone™ (PBZ) PBS/+COG/NBs/+Vol/PBZ/EOM = 70-pts

20ma 40ma

+Vol

+Vol

157

Weekly Pristine Buy Zone Play (PBZ) Target Area

mS

PBS in the PBZ

158

Pristine Buy Zone Play (PBZ) Score the circled PBZ Play 1. PBS____ 20 pts.__ 2. ________ _______ 3. ________ _______ 4. ________ _______ 5. PBZ____ 10 pts._ Total Score: _______ r20ma PBS

r40ma

PBO

159

Pristine Sell Set-up (PSS) Quiz

PSS

List the trade elements 1. PSS + (20 pts) 2. ___ + 3. ___ + 4. ___ + 5. ___ + 6. ___ + 7. ___

160

Trading the Pristine Method® Pristine Trading Combos for Stages 1 & 3

www.pristine.com 161

Introduction to Trading Stages 1 & 3 In this section, we show the trader how to combine the Pristine Buy Set-up (PBS), the Pristine Sell Set-up (PSS), the Climactic Buy Set-ups (CBS) and the Climactic Sell Set-up with several powerful occurrences that dramatically increase the trader’s odds of success in Stages 1 and 3. Individually, these Key Pristine Setups tend to reap profits while ensuring that the trader plays on the right side of professional market makers and specialists. However, the Pristine Buy & Sell Setups, along with the Climactic Buy and Sell Set-ups, used in conjunction with the following events will actually help increase the accuracy of these already accurate patterns. Trading truly becomes closer to a science once one knows how to properly identify and exploit the moments when these powerful trading events occur simultaneously in Stages 1 & 3. Once again, we are going to delve deeper into the realm of professionalism, showing how our tested trading patterns along with several other signals or occurrences can reap sizeable profits even in the most neutral market environments. Keep in mind that each trading concept taught in this section can be applied in all time frames.

162

Major Price Support (MS) & Resistance (MR) The concept of Major Support (MS) & Resistance (MR) forms the foundation for numerous highly accurate trading tactics. Its main purpose is to help the PTT exploit the opportunities that exist in sideways trading patterns. Because the market spends a good portion of its time trapped in neutral sideways trading patterns, it is imperative that the PTT know how to adeptly handle them with the following concept. We have found this concept to be so powerful that we know traders who earn a very decent living by simply and exclusively buying stocks at or near support and selling them at or near key points of resistance. The use of reversal bars, volume and all the other trading concepts we’ve taught you so far, come in handy with this concept as well. Let’s begin our exploration of Major Price Support (MS) and Major Price Resistance (MR)! Trading Combo 9 163

Major Price Support (MS) 10-pts Major Price Support (MS) Major Price Support (MS) is a price level or area at which demand for a stock overwhelms the existing supply. In other words, it is an area at which the buying (which was light) begins to overwhelm the selling. This offers a unique “buying” opportunity. The key thing to remember is that MS can be defined by the following: “Current low revisits prior low.” Every low, from which a strong rally ensued, has contained within it a certain degree of “positive memory.” This is what creates something close to a self-fulfilling prophesy, which is another way of saying it creates a very high odds long scenario. $24 Area

$20 Area

Area of Price Support Trading Tip: The first and second circles were self-fulfilling buy points due to the previous low (uncircled) producing a strong rally back to the $24 area. This rally rewarded traders who will repeat their actions on the next go-around. 164

Major Price Resistance (MR) 10-pts Major Price Resistance (MR) Major Price Resistance (MR) is a price level or area at which the supply of a stock overwhelms the existing demand. In other words, it is an area at which the selling (which was light) begins to overwhelm the buying. This offers a unique “shorting” opportunity. The key thing to remember is that MR can be defined by the following: “Current high revisits prior high.” Every high, from which a strong decline ensued, has contained within it a certain degree of “negative memory.” This is what creates something close to a self-fulfilling prophesy, which is another way of saying it creates a very high odds short scenario. Area of Price Resistance

$24 Area

$20 Area Trading Tip: The first and second circles were self-fulfilling sell points due to the previous high (un-circled) producing a strong decline back to the $20 area. This decline hurt traders who will look to get out once they are redeemed. 165

Major Price Support (MS) 10-pts

The PBS & MS Combo

Positive Memory

PBS/+COG/NRB/+Vol/MS = 60-pts

Trading Combo 9 166

Major Price Resistance (MR) 10-pts

The PSS & MR Combo Negative Memory

PSS/-COG/NRB/+Vol/MR = 60-pts

Trading Combo 9 167

Major Sideways Pattern The Pristine Trained Trader (PTT) uses the concepts of MS and MR with the PBS and PSS. Circles show Pristine trading opportunities. Keep in mind that eventually all sideways trends will end in a breakout or breakdown. Major Price Resistance (MR)

Major Price Support (MS)

168

Major Sideways Pattern Major Resistance Area (MR)

Major Support Area (MS) Circle = Pristine Trading Opportunities Name them if you can.

169

Major Price Support (MS) The astute Pristine Trained Trader enters here

This area can be considered Major Support (MS) despite having only 1 reference point IF: a) Prior low is a CBS or b) It happens after a Deep Retracement and Trend line Break

CBS

MS

PBS

170

Major Support Area (MS)

Tip: MS is an area, not a specific price.

Positive Memory

Major Support Area (MS)

171

Major Support Area (MS)

Positive Memory caused by many traders being handsomely rewarded

Rewarded Traders always repeat their actions

Major Support Area (MS)

172

Major Support – Low Revisits Low

Robust rally creates the reward

Area of Major Support (MS) Prior Low

173

Major Price Support (MS) Trading Tip: Major Support is never a single price. Rather it is an area or zone from which prices rally.

Targets

Buy Major Support Area

BT

Volume Pick-up

174

Major Price Resistance (MR) 1

Major Price Resistance (MR)

2

At top #1, many people who bought got hurt, and now wait to get their money back. At top #2, the buyers who held on, get their money back, and immediately look to sell.

Stage 4

Stage 2

Trading Tip: The group of sellers at top #2 dramatically increases, making it a great opportunity for a potential short play.

BO Stage 1 Novice Volume

175

The Power of the 2T (MR) 1T

Stage 3

2T

Stage 2 The sharp retracement after 1T is followed by a seemingly bullish attempt on 2T. Notice how the PBO at 2T fails creating the sharp drop. This is a concept that we discuss in great detail in ATS

Stage 4

176

Major Resistance (MR) Major Resistance High Revisits Prior High Short

1st Target 40/60

2nd Target

177

Major Support (MS) & Resistance (MR)

Major Resistance: Origin of Pain

Area of Pain Revisited

MS

178

Pain Revisited = Sell Opportunity

Pain caused by sharp decline

Area of Pain Revisited

179

Major Support (MS) & Resistance (MR) MR & 200ma 200ma

20ma

Major Price Support (MS)

180

Major Support and Resistance 1 Area of Prior Pain

Short

Major Resistance

Major Support Area of Prior Reward

Look to buy a PBS out of Major Support

181

Major Support & Resistance

Major Price Resistance

Note: the formation of TTs in the MR zone and BTs in the MS zone.

Major Price Support

182

The Bullish “Pause” That Refreshes* It can be confusing at times determining whether a sideways price pattern is a topping Stage 3, which will eventually evolve into a bearish Stage 4, or just a pause or sideways consolidation in the context of an ongoing major Stage 2. Often times, a stock will rest (work off steam) by correcting sideways, not downward. This sideways “pause” is a healthy occurrence as it helps prepare the stock for another extended run to the upside (or downside if the trend is down and we are dealing with the “Stage 1 or Pause” issue. But many novice traders do not know how to differentiate between a healthy “pause” and an unhealthy Stage 3, especially given the fact that they are both sideways price patterns. The PTT buys the PBO here Tip: The main characteristics of a ‘pause’ are: 1. Narrow thin bases (not wide and whippy) 2. Volume is usually light during base 3. Rising 20ma

r20ma

At or near point of contact, the stock explodes upward! *Reverse for the Bearish Pause 183

The ‘Pause’ That Refreshes The Pause VS. The Stage 3 Pauses are narrow Stage 3s are wide Pauses have small bars Stage 3s have big bars Pauses have light Vol. Stage 3s have big Vol.

PBO

r20ma

Stop

200ma

Trade Action Steps 1. Buy the PBO 2. Place stop below the base 3. Manage as per Trading Plan

184

The ‘Pause’ Play Trade Action Steps 1. Buy the PBO 2. Place stop below the base 3. Manage as per Trading Plan PBO

Note: At or near the point of contact with the r20ma, the stock breaks out.

185

The Intra-day ‘Pause’ Trade Action Steps 1. Buy the PBO 2. Place stop below the base 3. Project base upward

Note: At or near the point of contact with the r20ma, the stock breaks out.

PBO Entry

20ma Stop

Big Volume

186

The Intra-day ‘Pause’ Trade Action Steps 1. Buy the PBO 2. Place stop below the base 3. Project base upward

Note: At or near the point of contact with the r20ma, the stock breaks out.

PBO Entry

Stop

20ma

40ma

Big Volume

187

The Intra-day Pause Note: the sideways “drift” towards the r20ma Tip: The PTT looks to buy the PBO once the stock nears the r20ma, which is now, and projects the base upward for the target.

PBO Entry

20ma Stop

Big Volume

188

The ‘Pause’ That Refreshes Note: At or near the point of contact with the d20ma, the stock breaks down.

d20ma

r20ma PBD

Trade Action Steps

1st Target area

1. Short the PBD 2. Place stop above the base 3. Manage as per Trading Plan

189

The ‘Pause’ Versus Stage 1

200ma

d20ma Short

Tip: The last drop moves the stock far away from the d20ma and the 200ma, which indicates that the decline is nearly over. The ensuing base may now yield a buyable breakout, versus another short opportunity.

Look to buy breakout

Stop

Volume Increase

190

The Pause Versus Stage 1 Stage 3

d20ma Stage 4

Trading Tip: Wide moves away from the 20ma lead to snap backs to the 20ma. When the move back is sideways, and the 20ma goes flat, a trend reversal is usually at hand. When the 20ma is far from the 200ma, and goes flat, the PTT should prepare to buy the breakout.

Wide Distance

200ma

Stage 1

191

Trading the Pristine Method® Power Trading Combos for Transitional Phases A,B,C & D

www.pristine.com 192

Introduction to Transitional Phases In this section, we show the trader how to combine the Pristine Buy Set-up (PBS), the Pristine Sell Set-up (PSS), the Climactic Buy Set-up (CBS), The Climactic Sell Set-up (CSS), the Pristine Breakout (PBO) and the Pristine Breakdown (PBD) Plays with several powerful occurrences that dramatically increase the trader’s odds of success in transitional phases A, B, C and D. Individually, these Key Pristine Setups tend to reap profits, while ensuring that the trader plays on the right side of professional market makers and specialists. However, the above Pristine Trading Techniques used in conjunction with the following events will actually help increase the precision of these already accurate concepts. Trading truly becomes closer to a science once one knows how to properly identify and exploit the moments when these powerful trading events occur simultaneously in the four transitional phases. In fact, the highest degree of trading mastery is attained once the four transitional phases are mastered, as they represent the most unpredictable and volatile segments of the market’s cycle. In this section we show how our tested trading patterns along with several other signals or occurrences can reap sizeable profits even in these turbulent areas and environments. Let us begin!

193

3 Parts of the Pristine Breakout (PBO) 1. The Initial Breakout: The stock breaks above major resistance (MR). This represents an “excellent” buy point from both a trading and investing point of view. 2. The First Pullback: The stock corrects or pulls back toward the initial breakout point. This represents the “safest” buy point, in addition to a second chance to jump on board an accelerating stock. 3. The Secondary Breakout: The stock moves above its prior peak. Buying at this point should only be done by the intermediate-term trader if trading on end-of-day time frames. It’s usually too late for the short-term trader, unless the secondary breakout is occurring in an intra-day time frame like the 2-min., 5-min. or 15-min. Tip: The PTT typically buys at 1 and 2, but often looks to sell the 3rd event. 3 1

Transitional Phase A

MR

MS

2 194

Pristine 1-2-3 Breakout Play (PBO) 1) a) 2) 3)

Buy at the initial PBO point Sell on initial rise Buy the PBS that forms on 1st pullback Sell above the secondary BO point

a

1) Initial PBO Narrow Base

2) 1st Pullback

Volume Decline

195

Pristine 1-2-3 Breakout (PBO) Action Steps 1. Buy the BO at 1 a. Sell the rally 2. Buy the PBS at 2 3. Sell into the 2nd BO

3) 2nd BO

1) Initial BO

2) 1st Pullback 20ma 200ma Notice the rising lows in the base before the PBO

196

Pristine Breakout Play (PBO) What Two Moves are Next? What Type of Bar and Volume Ignited the First Move?

3) Secondary Breakout

1) Initial Breakout

20ma

2) First Pullback

Pro Volume

197

Pristine Pop Quiz Name & Rate the Plays 1. ___ 2. ___ w/ ___, ___, ___

2

1

198

3 Parts of the Pristine Breakdown (PBD) 1. The Initial Breakdown: The stock breaks below key support. This represents an “excellent” entry point (short) from both a short-term trading & investing point of view. 2. The First Pullback: The stock corrects or pulls back (rebounds) toward the initial breakdown point. This represents the “safest” entry point on the short side, in addition to a second chance to jump on board a rapidly declining stock. 3. The Secondary Breakdown: The stock declines below its prior low (pivot). Shorting at this point should only be done by the intermediate-term trader if trading on end-of-day time frames. It’s usually too late for the short-term trader, unless the secondary breakdown is occurring in an intra-day time frame like the 2-min., 5-min. or 15-min. Tip: The PTT typically shorts/sells at 1 and 2, but often looks to cover the 3rd event. MR

2

MS

1

Transitional Phase C

3 199

Pristine Breakdown Play (PBD)

20ma 1st Pullback

Initial Breakdown

Pro +Vol

Secondary Break Novice +Vol

200

Pristine Breakdown Play (PBD) 40ma 20ma 1st Pullback

Initial Breakdown

Secondary Break

201

The Pristine Uptrend Line (UTL) 1. Start by marking the major low (ML) preceding (just below) the highest high (HH). Note: This is called the “anchor” and will only change when the stock makes a new high. 2. Find and mark the lowest low (LL) of the current upward move (up trend). Note: This point is moveable to the lows above it if there is price interference. 3. Connect these two points to form your Upward Trendline. Note: There should be little to no price interference between the two points. HH

10-pts ML Anchor

Trading Combo 10

Upward Trendline

LL Moveable

Upward Trend line Points: We need only two points to draw a proper upward trend line. 202

The Pristine Uptrend Line (UTL) HH HH = Highest High ML = Major Low LL = Lowest Low Note: there is little to no interference with price between the two points (ML & LL) ML Also note: the UTL is always extended into the future

Trading Combo 10

Step 1: Find ML Step 2: Find LL Step 3: Connect Step 4: Extend LL Pro Volume

203

The Pristine Downtrend Line (DTL) 1. Start by marking the major peak (MP) preceding (just above) the lowest low (LL). Note: This is called the “anchor” and will only change when the stock moves to a new low. 2. Find and mark the highest peak (HP) of the current downward move (downtrend). Note: This point is moveable to the peaks below it if there is price interference. 3. Connect these two points to form your Downward Trendline. Note: There should be little to no price interference between the two points.

HP Moveable

Downward Trendline

10-pts

Downward Trend line Points: We need only two points to draw a proper downward trend line.

Trading Combo 10

MP Anchor

LL 204

The Pristine Down Trend Line (DTL) HP MP = Major Peak HP = Highest Peak LL = Lowest Low

MP

Note: there is little to no interference with price between the two points (MP & HP) Step 1: Find MP Step 2: Find HP Step 3: Connect Step 4: Extend

Also note: the DTL is always extended into the future, and in this case did not need to be changed, as the most recent MP formed right at DTL formed from the previous MP.

Trading Combo 10

LL Novice Volume

205

Important Trend Line Notes Notes Note 1: The key point to remember is that, unlike traditional trendlines, Pristine Trend Lines are “evolving” indicators. They are changed with each new high and low. Note 2: It’s important to understand that Pristine Trend Lines help the trader to monitor the flow of funds in a tradable item. For instance, a downward trend line tells the trader that the flow of money is generally moving out of the stock or the market, and that the best odds exist on the short side, while the upward trend line says the reverse. In each case, the trader would primarily focus on the strategy of shorting all rallies toward the downward trend line and buying all pullbacks to the up trend line. Note 3: Lastly, Pristine Trend Lines also provide the trader with the earliest possible indication of change. This leads into our next discussion, which deals with what action is taken when Pristine Trend Lines are broken.

206

Two Criteria of an Up Trend Line Break (UTLB) 1. Initial break: This occurs when a stock breaks below its upward trend line. Note: This is NOT an action event. It is simply an early warning of a “possible” trend change. R&F 1 Action Point

2

Transitional Phase B

2. Retest & Failure: This occurs when a stock moves back toward the prior peak and fails. Note: This IS an aggressive action event that calls for a short. 207

Up Trend Line Break (UTLB) R&F

3 Criteria of an UTB 1. Initial break of trend line 2. Retest of prior high & failure 3. 2nd Break or retest of prior low

2

1

Note: The PTT shorts 2: The R&F

3

Pristine Trading Tip: After a sharp UTLB, an R&F is very likely. The PTT looks to short the R&F, with a stop above the high of the R&F and a target at 3.

208

Two Criteria of a Down Trend Line Break (DTLB) 1. Initial break: This occurs when a stock breaks above its downward trend line. Note: This is NOT an action event. It is simply an early warning of a “possible” trend change.

1

2

Transitional Phase D

R&F Action Point

2. Retest & Failure: This occurs when a stock moves back toward the prior low and fails. Note: This IS an aggressive action event that calls for a buy. 209

Downtrend Line Break (DTLB) DTLB

HH

1) Initial Break of Line 2) Retest & Failure Stage 2

Anchor

Stage 4

1

3

Tip 1: The initial break (1) isn’t an action event Tip 2: The retest & failure is an excellent buy opportunity

Transitional Phase D

LL

3) Secondary Break

2 Stage 1

Aggressive buy

Tip 3: Reviewremember this setup also was an example of a Major Support PBS

210

Pristine’s Seven Stock Market Events There are only seven things a stock or a market in general can do. We as traders must intimately know each one all. Knowing the seven events ensures that a trader will rarely be thrown or lost by anything the market does. They are building blocks of all market activity. There are no other actions to understand. These are it! Learn to exploit them and you will become a Master Trader! 1) Up trend

6) Upward Trend line Break 4) Breakout

2) Downtrend

5) Breakdown

7) Downward Trend line Break

3) Sideways Trend

There are no other market actions to learn! 211

Pristine Trading Combo Summary There are 10 Pristine Trading Combinations that we’ve reviewed so far. The PTT who has mastered all 10 will have gone far on his way to becoming a master trader. As we have always been fond of saying, the PTT really only needs two or three reliable trading combos to make a living in the markets. We have provided you with 10 so far. Once you’ve mastered them all, pick your favorite two or three and focus the majority of your trading around them. Let’s summarize the Pristine Trading Combos now. Buy Patterns PBS CBS What PBO

Sell Patterns PSS CSS What PBD

20-pts Each

Bull ‘Event’ Add-ons BT +COG With NRB/NB +VOL

Bear ‘Event’ Add-ons TT -COG NRB/NB +Vol 10-pts Each

With

Bull ‘Location’ Add-ons mS MS +40/60 Where r20ma PBZ UTL

Bull ‘Time’ Add-ons BOM MOM EOM 9 Micro Reversals

Bear ‘Location’ Add-ons mR MR -40/60 Where d20ma PSZ DTL

Bear ‘Time’ Add-ons BOM MOM EOM 9 Micro Reversals

10-pts Each

10-pts Each

When

When

212

Pristine Trading Combo Review There are only three ways to buy and three ways to sell according to the Pristine Method® of Trading. The PBS, CBS and the PBO represent the three ways to buy, and the PSS, CSS and the PBD represent the three ways to sell/short. Pristine’s Point System is primarily used when dealing with the PBS and PSS. While the CBS/CSS and PBO/PBD plays can be scored, keep in mind that there scores are likely to be low as many of the add-on events are already incorporated into the basic criteria of the patterns. For instance, a CBS only exists if a +COG and a BT or NRB/NB already exists. Without these items, there can be no CBS. The CBS and its sell equivalent is rated 20-pts as is the PBO and the PBD. Only a few additional events can be added. Bull Trading Combos 1) PBS plus BT 2) PBS plus +COG 3) PBS plus NRB/NB 4) PBS plus +Vol 5) PBS @ mS 6) PBS @ MS 7) PBS @ +40/60 8) PBS @ r20ma 9) PBS @ PBZ 10) PBS @ UTL

Bear Trading Combos 1) PSS plus TT 2) PSS plus -COG 3) PSS plus NRB/NB 4) PSS plus +Vol 5) PSS @ mR 6) PSS @ MR 7) PSS @ -40/60 8) PSS @ d20ma 9) PSS @ PSZ 10) PSS @ DTL

Three Ways to Buy: PBS; CBS; PBO

Bull ‘Time’ Add-ons BOM MOM EOM 9 Micro Reversals

Pristine Tip: A time event added on to any one of the 10 trading combos provides a high level of potency to the trade.

Bear ‘Time’ Add-ons BOM MOM EOM 9 Micro Reversals

Three Ways to Sell: PSS; CSS; PBD 213

Trading the Pristine Method® Using Pristine’s Climactic Buy & Sell Set-ups to Buck the Trend

www.pristine.com 214

The Climactic Buy Set-up (CBS)

• The Climactic Buy Set-up (CBS) is made up of 4-5 key criteria. • The CBS is the key to capturing robust gains against the trend.

3 20ma 2 4

• The PTT uses this one setup alone to buck the prevailing trend.

CBS

• The CBS is not scored in the Pristine Trade Score System. • The CBS can be found and traded in all times frames.

1

215

Climactic Buy Set-up (CBS)

1st Criterion:

2nd Criterion: 3rd Criterion: 4th Criterion: 5th Criterion:

5 or more consecutive lower highs or 5 or more red bars Tip: Having both makes the set-up more potent. BT, NRB or +COG Far below 20ma (8-10% Daily, 2-3% Intra-day) Volume Increase Intra-Day Reversal Time (optional)

The Action

5 Red Bars w/ LHs

20ma

Far below 20ma

The Setup

Climactic Buy Set-up (CBS)

+COG +Vol

*Reverse for the Climactic Sell Set-up (CSS) Reversal Time (if intra-day)

10:00

216

CBS’s Four Action Steps The Setup

The Action

1) Buy when the stock trades above the prior bar’s high, or Buy when the stock trades above its first 30-minute high (Swing Trades). Note: Only use the 30-minute entry method if the prior bar’s high is too far away. 2) Place a stop slightly below the entry bar’s low, or the prior bar’s low, whichever is lower. Traders who want to have a tighter stop can use the entry bar’s low. The only caveat is that the trade’s favorable odds are reduced a bit. 3) Establish the minimum target at the 20ma, prior congestion or use Pristine’s 40/60 Sell Rule. 4) After two bars are complete, place a trailing stop under each prior low until a) the price objective is met (20ma,prior congestion area or 40/60), b) a gap up has occurred.

20ma

Objective

Buy $0.01 above the prior bar’s high.

Note: Volume not shown

2

Stop loss slightly below the current or prior bar’s low.

4

3

1

= Trade Management 217

+Vol & The CBS

PSS Sell Area

8 lower highs

Four CBS Criteria Met 1. Eight lower highs 2. Bottoming Tail 3. Volume Increase 4. Far from 20ma (not shown)

Buy BT

Stop

Big Volume Ends Current Move Novice Volume

218

+Vol & The CBS

+Vol

20ma

Sell Area

Four CBS Criteria Met 1. Eleven Red Bars 2. Bottoming Tail/+COG 3. Volume Increase 4. Far from 20ma (not shown)

+Vol

11 Red Bars Buy BT

Stop

Novice Volume

219

Daily Climactic Buy Set-up (CBS) 20ma 40ma

c Daily Climactic Buy Set-up 1. 5 or more lower highs or Red Bars 2. BT, NRB, or +COG 3. Increase in Volume 4. Far from the 20ma (8% or more)

1 a

Action a. Buy above BT Bar b. Stop below BT Bar c. Target at or near 20ma or use the 40/60 Rule

b 2

220

5-min Climactic Buy Set-up Action 1. Buy above BT 2. Stop below BT 3. Target at or near 20ma

20ma

Target Percentage Guidelines for Scanning Daily 8%+ Intra 2%+

Climactic Buy Set-up 1. 5 or more lower highs 2. BT, NRB, or +COG 3. Increase in Volume 4. Far from the 20ma (2% or more) 5. Reversal Time

BT

221

2-min Climactic Buy Set-up

Target

20ma Climactic Buy Criteria 1. 5 or more Red Bars 2. BT, NRB or +COG 3. Volume Increase 4. Far from 20ma 5. Reversal Time

Action 1. Buy above COG 2. Stop below COG low 3. Target @ 20ma

Buy Stop

222

60-Min Climactic Buy Set-up 20ma

Action 1. Buy above prior high 2. Stop below prior low 3. Target @ 20ma

Target

Climactic Buy Criteria 1. 5 or more Red Bars 2. BT, NRB or +COG 3. Volume Increase 4. Far from 20ma (2% or more) 5. Reversal Time

Buy Here Stop

223

Are the CBS Criteria In Place?

1. Where is your buy? 2. Where is your stop? 3. Where is your target?

224

Climactic Sell Set-up (CSS) CSS

Four CSS Criteria Met 1. Fifteen Higher Lows 2. Narrow Body (NB) 3. Volume Increase (+Vol) 4. Far from 20ma

Novice Gap -COG

Target

+Vol

225

The CSS - The Last Hurrah! CSS

Four CSS Criteria Met 1. Five Green Bars 2. –COG/TT 3. Volume Increase (+Vol) 4. Far from 20ma

Possible Failure Failed PBS

PBS

Four CBS Criteria Met 1. Five Lower Highs 2. NRB 3. Volume Increase 4. Far from 20ma

Tip: The 1st PBS after a CSS possesses low odds. The same is true in reverse. +Vol

226

Climactic Sell Set-up (CSS) CSS

Four CSS Criteria Met 1. Five Green Bars 2. –COG/TT 3. Volume Increase 4. Far from 20ma

Stage 4

Stage 2 PBO Stage 1

r20ma

227

15-min Climactic Sell Set-up Climactic Sell Criteria 1. 5 higher lows or green bars 2. TT, NRB/NB or -COG 3. Volume Increase 4. Far from 20ma (2% or more) 5. Reversal Time

Action 1. Short below prior low 2. Stop above prior high 3. Target @ 20ma

Stop Short

Target

20ma

228

Trading the Pristine Method® Pristine’s Master Trading Plan

www.pristine.com

Building a Pristine Trading Plan What is a Trading Plan?

• A trader who seeks consistent results must have rules that will determine what, when and how to trade. • A Pristine Trading Plan includes sections dealing with: • • • •

Goals Daily Activities Money Management Tactics-Strategy

230

Building a Pristine Trading Plan Setting Up Your Trading Goals • • • • • •

Goals must be focused on consistency, not money! Establish the style of trading you will pursue. Decide the timeframes you’ll focus on. Determine the capital you’ll use. Batting Average & Sharpe Ratio. Will you begin Paper Trading?

•

What are your monetary goals?

231

Building a Pristine Trading Plan Money Management • • • •

Your Money Management system is highly important! Establish Maximum Loss per Account first. Establish the Goal for a Winning Period (Day, Month). Maximum Loss per Period (Day, Month).

• • •

Maximum Loss per Trade. What to do if you reach your goal for the Day/Month? Let’s see an example:

232

Building a Pristine Trading Plan Money Management • • • • • •

Account Capital: $100,000.00 Max. Loss per Account: $10,000 (If met, seek help) Goal for a Winning Day: $1,000 Max. Loss per Day: $600 (Must be smaller than goal) Max. Loss/Trade: $200 (Allows for 3 trades) The Max. Loss/Trade will tell you how many shares to Buy/Sell Short:

•

Example: QCOM has a PBS w/ a 0.20 Stop. Buy 1,000 shares x 0.20 = $200 (Plus slippage)

•

If Profit Target met, close computer (Or setup rules to protect a large % of the gain to avoid giving it all back). 233

Building a Pristine Trading Plan Tactics • • • • • • • •

Style of Trading to Pursue: Core, Swing, Intra-day. Tactics to Use: PBS, PBO, CBS etc… Timeframe to Trade: 5-min, 15- min, Daily etc… Define the Tactic(s) in Great Detail. Define the Market Conditions you Want to Have. Define Your Entry Tactics in Great Detail. Define Your Position Management Rules. In the next slides you’ll see examples of how to do this: Pristine Tip: Create a quick reference “trade entry criteria” guide and print out 1-2 pictures of your favorite pattern(s) as a reference when scanning, and keep this on your desk at all times.

234

Pristine’s Master Buy Trading Plan Pristine Buy Criteria 1) Stocks must be in a solid up trend, making higher highs and higher lows. Note: This ensures that the stock is in Stage 2, the most bullish period of its cycle.

2) Stocks must have a smooth rising 20-period moving Average (r20MA). 3) Stocks must have a smooth rising 40-period moving Average (r40MA). 4) The r20ma must be above its r40ma. 5) There must be an nice even space in between the r20ma & r40ma (railroadtracks) ACTION: Now the Pristine Trained Trader (PTT) can use these stocks to buy ALL trading dips utilizing the Pristine Buy Setup (PBS) and the Pristine Breakout (PBO).

Pristine Buy Setup (PBS) 1) Wait for a Pristine Buy Setup (PBS) to form. Then…

235

Pristine’s Master Buy Trading Plan Pristine Entry Method(s) 1) Buy $0.01 above the previous bar’s high price, whenever it occurs or… 2) Buy above the highest price established during the first 30-minutes of trading, if the previous bar’s high is too far away. This entry method should be used for Swing entries and can often get the PTT into a play early, when the market is strong. But the odds of the play are altered downward when using this method.

Pristine Insurance Policy (The Initial Stop) 1) Place your initial stop slightly below the current bar’s low or the previous bar’s low, whichever is lower. If the previous bar’s low is too far away, use the current bar’s low. For Swing Trades, if the current bar’s low is also too far away, use the Pristine’s 30-min. Sell Rule (Keep in mind that you alter the odds downward).

Pristine Profit-Taking (Trade Management) Strategies 1) Sell above the prior high and/or… 2) Sell at least ½ of your position after a rapid advance (WRB) and/or… 3) Start trailing your stop under each previous bar’s low after two bars completed 4) Sell on any gap open to the upside (Swing Trades), after two consecutive up days or after the stock has lifted away from its r20ma. 236

The Pristine Method® of Trading Target

Basic Buy Criteria 1. Higher highs/lows 2. r20ma 2. r40ma 3. r20ma>r40ma 4. Space in Between

Buy Stop

r20ma r40ma

Action Steps 1. Buy above prior high (NRB) 2. Place stop below prior low 3. Set target above pivot high 4. Trail mode after two bars

237

The Pristine Method® of Trading What is the most likely direction now? Play Rating PBS (20 pts) COG (10 pts) NB (10 pts) PBO

40 pt Play Are we missing any “add-ons”?

20ma PBO

PBS 40ma

Stage 1

238

The Pristine Method® of Trading d Uptrend Criteria 1. Higher Highs (a –d) 2. Higher Lows (1 – 5) 3. Rising 20ma (r20ma) 4. Rising 40ma (r40ma) 5. Even space in between All Pullbacks are Buyable Breakouts are also Buyable

c b 5 4 3

a

r20ma

2 r40ma 1

Circles = Pristine Trading Opportunities

239

The Pristine Method® of Trading D

Up Trend Criteria 1) Higher Highs (A - D) 2) Higher Lows (1 -4) 3) Rising 20ma (r20ma) 4) Rising 40ma (r40ma) 5) Comfortable Space Between

A

C 4

B 3

2

Even Space r20ma

1 r40ma

240

Pristine Buy Set-up Can you score this PBS? Action Steps 1. Buy above prior high (NRB) 2. Place stop below prior low 3. Set target above pivot high 4. Trail mode after two bars

Target

Buy Stop

Basic Buy Criteria 1. Higher highs/lows 2. r20ma 2. r40ma 3. r20ma>r40ma

241

The Pristine Method® of Trading - QUIZ ➢Find and Circle a Breakout Play (PBO) ➢Find and Circle all the Pristine Buy Set-ups (PBS) ➢Find and Circle all mS areas ➢Find and Circle all 40/60 retracements

r20ma

r40ma

242

Pristine Trading Quiz ➢Find and Circle a Breakout Play (PBO) ➢Find and Circle a Pristine Buy Set-up (PBS) ➢Find and Circle a Climactic Sell Setup (CSS)

r20ma

r40ma

243

Pristine’s Master Sell Trading Plan Pristine Sell Short Criteria 1) Stocks must be in a solid down trend, making lower highs and lower lows. Note: This ensures that the stock is in Stage 4, the most bearish period of its cycle.

2) Stocks must have a smooth declining 20-period moving Average (d20MA). 3) Stocks must have a smooth declining 40-period moving Average (d40MA). 4) The d20ma must be below its d40ma. 5) There must be an nice even space in between the d20ma & d40ma (railroad tracks) ACTION: Now the Pristine Trained Trader (PTT) can use these stocks to short ALL trading rallies utilizing the Pristine Sell Setup (PSS) and the Pristine Breakdown (PBD).

Pristine Sell Setup (PSS) 1) Wait for a Pristine Sell Setup (PSS) to form then…. 244

Pristine’s Master Sell Trading Plan Pristine Entry Method(s) 1) Sell Short $0.01 below the previous bar’s low price, whenever it occurs or… 2) Sell Short below the lowest price established during the first 30-minutes of trading, if the previous bar’s low is too far away. This alternative entry method should be used for Swing Trading and can often get the PTT into a play early, when the market is weak. But know that the odds of the play are altered downward when using this method.

Pristine Insurance Policy (The Initial Stop) 1) Place your initial stop slightly above the current bar’s high or the previous bar’s high, whichever is higher. If the previous bar’s high is too far away, use the current bar’s high. If the current bar’s high is also too far away, use the Pristine’s 30-min. Buy Rule (For Swings). Keep in mind that you alter the odds downward with this alternative.

Pristine Profit-Taking (Trade Management) Strategies 1) Cover below the prior low and/or… 2) Cover at least ½ of your position after a rapid decline (WRB) and/or… 3) Start trailing your stop above each previous bar’s high after two bars and/or…. 4) Cover on any gap open to the downside (Swing Trades), after two consecutive down days or after the stock has dropped away from its d20ma. 245

The Pristine Method® of Trading Stage 3

a d20ma d40ma

b 1 c

Stage 2

Down Trend Criteria 1. Lower Highs (a –e) 2. Lower Lows (1 – 6) 3. Declining 20ma (d20ma) 4. Declining 40ma (d40ma) 5. Even space in between

2 Even Space

d 3

e

4 Stage 4

5

All Rallies are Shortable Breakdowns are also Shortable 6

246

Trading the Pristine Method® Pristine Guerrilla Trading Tactics

www.pristine.com 247

Introduction to Guerrilla Trading In this section, we will reveal a few of our most cherished trading tactics. These are tactics and trading techniques that were designed specifically for the professional trader who seeks a frequent number of short-term trading plays each day. These following tactics are so reliable for us, that many PTTs have decided to focus on them exclusively to earn their living entirely from the markets. We have always taught that the professional trader needs only 2 to 3 highly reliable trading tactics in his arsenal in order to earn a very comfortable living trading. You are about to be made aware of 12 such tactics. These tactics will help the trader consistently “grind” out profits, day in and day out. They do not always result in the way of huge gains, but the consistency of their wins makes them an indispensable addition to your trading arsenal. With these 12 Guerrilla Trading Tactics, your trading can be taken to an entirely new level. So, in advance, let us say: Welcome to the Professional’s Trading Circle!

248

The Bullish 20/20 Bar • The Bullish 20/20 bar is defined by any wide-range period that has its open price near the low of that period and its close near the high of that period. • We call it 20/20 because as a general rule, the open should be in the lower 20% of the period’s range, and the close should be in the upper 20% of the period’s range, making a long, light or green colored candlestick. • Bullish 20/20 bars are far more important when they occur after at least one prior up bar. Several proceeding up bars makes the 20/20 even more significant.

The Bullish 20/20 Bar the most recent bar

Bullish 20/20 Bar

Close at or near the top of the bar’s range.

Open at or near the bottom of the bar’s range.

• The Bullish 20/20 bar signifies that many traders and investors are already long.

249

The Bearish 20/20 Bar •

•

•

The Bearish 20/20 bar is defined by any wide-range period that has its open price near the high of that period and its close near the low of that period. We call it 20/20 because as a general rule, the open should be in the upper 20% of the period’s range, and the close should be in the lower 20% of the period’s range, making a long, solid dark or red candlestick. Bearish 20/20 bars are far more important when they occur after at least one prior down bar. Several proceeding down bars make the 20/20 more significant.

The Bearish 20/20 is the most recent bar

Open at or near the top of the bar’s range.

Bearish 20/20 Bar Close at or near the bottom of the bar’s range.

• The Bearish 20/20 bar signifies that many traders and investors have already sold. 250

The Pristine Gap–n–Snap Play – Tactic One The Setup 1.

The Action

The stock should have two fluid red bars in a row.

Two fluid red bars in a row.

2. We need a wide-range bar on the current day. At least $1.50 (For an avg. $30 stock) or 5%. 3. The open of the current day must be in the top 20% of the day’s price range.

Important Points @ The GnS 1. Works best as a 1 to 2-day Trading Tactic. 2. Works best on volatile NASDAQ stocks.

4. The close must be in the bottom 20% of the day’s price range.

251

The Pristine Gap–n–Snap Play – Tactic One The Setup

The Action

1. If the stock gaps open to the downside by $0.50 (For avg. $30 stock) or more, and then begins to rally back, buy it above the previous day’s low. 2.

Place a protective stop slightly below the current day’s low.

Two fluid red bars in a row.

Buy long above the previous day’s low. Stock gaps down at the open.

3.

Sell for a $2 plus profit (For avg. $30 stock) or on the 2nd day, whichever comes first.

Stop loss slightly below the current day’s low.

The Gap-n-Snap Play (GnS)

252

The Pristine Gap–n–Crap Play / Tactic Two The Setup

The Action

1. The stock should have two

fluid green bars in a row. 2.

Wide-range day at least $1.50 (For avg. $30 stock) or 5%.

3. The open must be in the bottom 20% of the day’s range. 4.

Two fluid green bars in a row.

The close must be in the top 20% of the day’s range.

Important Points @ The GnC 1. Works best as a 1 to 2-day Trading Tactic. 2. Works best on volatile NASDAQ stocks.

253

The Pristine Gap–n–Crap Play / Tactic Two The Setup

The Action

1. If the stock gaps open to the upside by $0.50 or more (For avg. $30 stock) or 5%, and then begins to fall back, sell (short) below the previous day’s high. 2. Place a protective stop slightly above the current day’s high. 3. Cover for a $2 plus profit (For avg. $30 stock) or on the 2nd day, whichever comes first.

Stock gaps up at the open.

Two fluid green bars in a row.

Stop loss slightly above the current day’s high.

Sell short below the previous day’s high.

The Gap-n-Crap Play (GnC)

254

Bullish Gap Surprise – Tactic Three The Setup

The Action

1.

The stock should have 2 fluid red bars in a row.

2.

We need a wide-range day of at least $1.50 (for avg. $30 stock) or 5%.

Two fluid red bars in a row.

Above average or climactic volume.

3.

The open must be in the top 20% of the day’s range.

4.

The close must be in the bottom 20% of the day’s range.

Important Points @ The +GS 1. Works best as a 1 to 2-day Trading Tactic. 2. Works best on volatile NASDAQ stocks.

5.

Above average volume. 255

Bullish Gap Surprise – Tactic Three The Setup

The Action

1. If the stock opens (gaps) up by at least $0.50 (For avg. $30 stock) above the previous day’s closing price, buy it above the first 5 min. high (aggressive traders can use ‘immediate’ entry).

2. Place a protective stop slightly below the prior day’s low. 3. Sell for a $2 to $3 plus profit (For avg. $30 stock) or on the 2nd day, whichever comes first.

Two fluid red bars in a row.

Stop loss slightly below the prior day’s low.

Stock gaps up at the open. Buy immediately.

Above average or climactic volume.

Bullish Gap Surprise Play (+GS)

256

Bearish Gap Surprise – Tactic Four The Setup

The Action

1.

The stock should have two fluid green bars in a row.

2.

We need a wide-range day of at least $1.50 (For avg. $30 stock) or 5%.

3.

The open must be in the bottom 20% of the day’s range.

4.

The close must be in the top 20% of the day’s range. Above Average Volume.

5.

Two fluid green bars in a row.

Above average or climactic volume.

Important Points @ The –GS 1. Works best as a 1 to 2-day Trading Tactic 2. Works best on volatile NASDAQ stocks

257

Bearish Gap Surprise – Tactic Four The Setup

The Action

1. If the stock opens (gaps) down by at least $0.50 (For avg. $30 stock) below the previous day’s closing price, sell (short) below the first 5 min. low (aggressive traders can use ‘immediate’ entry). 2. Place a protective stop slightly above the prior day’s high 3. Cover for a $2 to $3 plus profit (For an average $30 stock) or on the 2nd day, whichever comes first

Two fluid green bars in a row.

Stop loss slightly above the prior day’s high.

Stock gaps down at the open. Sell immediately. Above average or climactic volume.

Bearish Gap Surprise Play (-GS)

258

Bullish 20/20 Play – Tactic Five The Setup 1.

2.

3.

4.

5.

The Action

Two fluid red bars in a row.

The stock should have two fluid red bars in a row. We need a wide-range day of at least $1.50 (For avg. $30 stock) or 5%.

Above average volume.

The open must be in the top 20% of the day’s range. The close must be in the bottom 20% of the day’s range.

Important Points @ The +20/20 1. Works best as a 1 to 2-day Trading Tactic 2. Works best on volatile NASDAQ stocks

Above Average Volume. 259

Bullish 20/20 Play – Tactic Five The Setup

The Action

1. If the stock opens less then $0.50 (For avg. $30 stock) above the previous day’s low, wait for 30 minutes of trading to transpire. Then, buy the stock above the high established during the first 30 minutes of trading. 2. Place a protective stop slightly below the current day’s low or the previous day’s low, whichever is lower. 3. Sell for a $2 plus profit (For avg. $30 stock) or on the 2nd day, whichever comes first.

Two fluid red bars in a row.

Stop loss slightly below the lowest low of the last two days.

Stock opens relatively even. Use 30-min. buy rule.

Above average volume.

The Bullish 20/20 Play (+20/20)

260

Bearish 20/20 Play – Tactic Six The Setup

The Action

1. The stock should have two fluid green bars in a row. 2. We need a wide-range day of at least $1.50 (For avg. $30 stock) or 5%.

Two fluid green bars in a row.

Above average volume.

3. The open must be in the bottom 20% of the day’s range. 4. The close must be in the top 20% of the day’s range.

Important Points @ The -20/20 1. Works best as a 1 to 2-day Trading Tactic. 2. Works best on volatile NASDAQ stocks.

5. Above Average Volume. 261

Bearish 20/20 Play – Tactic Six The Setup

The Action

1. If the stock opens less then $0.50 (For avg. $30 stock) below the previous day’s high, wait for 30 minutes of trading to transpire. Then, sell short the stock below the low established during the first 30 minutes of trading. 2. Place a protective stop slightly above the current day’s high or the previous day’s high, whichever is higher. 3. Cover for a $2 plus profit (Avg. $30 stock) or on the 2nd day, whichever comes first.

Stop loss slightly above the highest high of the last two days.

Two fluid green bars on a row.

Above average volume.

Stock opens relatively even. Use 30-min sell rule.

The Bearish 20-20 Play (-20/20)

262

The Bull Trap – Tactic Seven The Setup

The Action

1. The current bar must represent a very bullish day, a wide range 20/20 bar. Note: Preferably this day has been proceeded by a multi-day upward move.

2. The open must be in the bottom 20% of the day’s range. 3. The close must be in the top 20% of the day’s range. 4. Above average volume on the current day (optional).

A

B

C

D

This method works accurately on stocks in all price ranges. It is best used as a multi-bar strategy. It should be played with smaller than normal trading lots. 263

The Bull Trap – Tactic Seven The Setup

The Action

1. Short the stock $0.01 below the low of the prior day (the Bull day) if it’s been violated. Note: Some traders may prefer to short the stock near the close, as it is hard to determine if the stock will remain below the low of the Bull day. 2. Place a protective stop slightly above the current day’s high or the previous day’s high, whichever is higher. 3. Manage as a multi-day play (3 – 5 days move) as per your Trading Plan.

The Bull Trap Play (+Trap)

A

B

C

D

The dotted red lines in examples A-D show where the trader goes short. Keep in mind that the bull day does not need to be as wide as the typical 20/20 day. The key to this strategy lies in the “immediate” break to the downside. 264

The Bear Trap – Tactic Eight The Setup

The Action

1. The current bar must represent a very bearish day, a wide range 20/20 bar. Note: Preferably this day has been proceeded by a multi-day down move.

2. The open must be in the top 20% of the day’s range. 3. The close must be in the bottom 20% of the day’s range. 4. Above average volume on the current day (optional).

A

B

C

D

The Bear Trap Play (-Trap)

This method works accurately on stocks in all price ranges. It is best used as a multi-day strategy. It should be played with smaller than normal trading lots. 265

The Bear Trap – Tactic Eight The Setup

The Action

1. Buy the stock $0.01 above the high of the prior day (the Bear day) if it’s been violated. Note: Some traders may prefer to buy the stock near the close, as it is hard to determine if the stock will remain above the high of the Bear day. 2. Place a protective stop slightly below the current day’s low or the previous day’s low, whichever is higher. 3. Manage as a multi-day play (3 – 5 days move) as per your Trading Plan.

The Bear Trap Play (-Trap)

A

B

C

D

The dotted red lines in examples A-C show where the trader goes long. Keep in mind that the bear day does not need to be as wide as the typical 20/20 day. The key to this strategy lies in the “immediate” break to the upside. 266

Guerrilla Trading Tactics 20/20

-20/20 -GS

+GS

267

Gap N Snap Play

WRB Ending Bar

Novice Ending Volume

268

Bullish Gap Surprise Target

Entry

Stop

Pro Igniting Volume

Novice Ending Volume

269

Bull Trap & Bear Trap What’s This?

-GS ignites a new move lower

Bull 20/20 the Bear Trap ignites a new move higher Novice/Pro Volume? Novice Volume

Pro Volume

270

The 1-2-3 Continuation Buy – Tactic Nine The Setup

The Action

1. Bar 1 must be a wide range bullish 20/20 IGNITING BAR. This is the bar that dictates the direction of the trade. Note: Keep in mind that this strategy can be applied in almost any time frame. 2. Bar 2 must stay (trade) within the top 1/3 of Bar 1, without trading above Bar 1’s high. 3. The high of Bar 2 must be equal or “near” equal with the high of Bar 1. Note: This establishes a mini double top (two equal highs) which represents price resistance. 4. Preferably, Bar 2’s close is “below” its open, creating a negative (dark) candle.

The Bullish 123 Continuation Play (+123)

A

B

C

D

This method works accurately on stocks in all price ranges. It is also an excellent intra-day tactic used on hourly, 15- & 5-min. charts. This buy tactic helps traders jump on board strong trends already in progress. 271

The 1-2-3 Continuation Buy – Tactic Nine The Setup

The Action

1. Immediately buy when Bar 3 trades above the highs of Bar 1 and Bar 2. Note: This signifies that a two-bar breakout has occurred. 2. Place your stop just under the low of Bar 2. Note: Due to a tight stop Risk/Reward is usually increased. 3. Use a trailing stop strategy until a) your objective has been met, b) the low of a reversal bar has been violated or c) a gap up occurs (Swing Trades).

The Bullish 123 Continuation Play (+123)

A

B

C

D

The dotted green lines in Examples A – D show where the trader goes long. Note that in all examples, Bar 1 is up strongly in the form of a bullish 20/20 period. Keep in mind that it is Bar 1 that determines the direction of the trade (long or short). The key to this strategy lies in the fact that the stock rested enough to explode upward again. 272

1-2-3 Continuation Play

+123

+WRB

r20ma

200ma

273

Daily 1-2-3 Continuation Play

Stage 4

+123 Entry +WRB Igniting Bar

Stage 1

274

60’ 1-2-3-4 Continuation Play

Stage 2 Stage 4 +1234 Entry

+WRB

Stage 1

+1234 Stop

275

Intra-day 1-2-3 Continuation Play

+123 Entry

r20ma

+WRB +123 Stop r200ma

276

The 1-2-3 Continuation Short – Tactic Ten The Setup

The Action

1. Bar 1 must be a wide range bearish 20/20 IGNITING BAR. This is the bar that dictates the direction of the trade. Note: Keep in mind that this strategy can be applied in almost any time frame. 2. Bar 2 must stay (trade) within the bottom 1/3 of Bar 1, without trading below Bar 1’s low. 3. The low of Bar 2 must be equal or “near” equal with the low of Bar 1. Note: This establishes a mini double bottom (two equal lows) which represents support. 4. Preferably, Bar 2’s close is “above” its open, creating a positive (light) candle.

The Bearish 123 Continuation Play (-123)

A

B

C

D

This method works accurately on stocks in all price ranges. It is also an excellent intra-day tactic used on hourly, 15- & 5-min. charts. This sell short tactic helps traders jump on board strong trends already in progress. 277

The 1-2-3 Continuation Short – Tactic Ten The Setup

The Action

1. Immediately short when Bar 3 trades below the lows of Bar 1 and Bar 2. Note: This signifies that a two-bar breakdown has occurred. 2. Place your stop just above the high of Bar 2. Note: Due to a tight stop Risk/Reward is usually increased. 3. Use a trailing stop strategy until a) your objective has been met, b) the high of a reversal bar has been violated or c) a gap down occurs (Swing Trades).

A

B

C

D

The Bearish 123 Continuation Play (-123)

The dotted red lines in Examples A – D show where the trader goes short. Note that in all examples, Bar 1 is down strongly in the form of a bearish 20/20 period. Keep in mind that it is Bar 1 that determines the direction of the trade (long or short). The key to this strategy lies in the fact that the stock rested enough to collapse downward again. 278

Bearish 1-2-3 Continuation Play

PBD

-123 r20ma r40ma

279

Bearish 1-2-3-4 Continuation Play

-WRB d20ma

-1234

What pattern is this?

What type of volume is this?

280

The Bearish Mortgage Play – Tactic Eleven The Setup

The Action

1. Bar 1 must be a bullish 20/20 bar. This is the bar that indicates that a large number of longs have been committed. Note: The smaller the upper and lower tails on Bar 1 the better. 2. Bar 2 must open below the low of Bar 1. Note: Although the Mortgage Play is only a two-bar strategy, it’s often more potent after a multi-day move up (The more people trapped, the more powerful).

A

B

open

open 281

The Bearish Mortgage Play – Tactic Eleven The Setup

The Action Bearish Mortgage Play (-Mort)

1. Immediately short at the market when Bar 2 opens below the low of Bar 1. Note: This signifies that now every hedge fund, mutual fund, trader, and investor who bought during Bar 1 is now in negative territory. All longs are thrown for a loop. 2. Place your stop just over the high of Bar 1. Note: This makes for a large stop. If played this way, you must adjust your position size. Many traders may want to opt for a tighter stop based on an intraday chart. 3. Use a trailing stop strategy until a) your objective has been met, b) the high of a reversal bar has been violated or c) a gap down occurs.

Stop Loss

A

B

Short at Open

The Mortgage Short Play requires a large stop, signified by the dotted red lines, are in Examples A – B. We encourage playing small due to the large stop loss. When applied properly, this pattern can produce large gains.

282

The Bullish Mortgage Play – Tactic Twelve The Setup

The Action

1. Bar 1 must be a bearish 20/20 bar. This is the bar that indicates that a large number of traders have sold. Note: The smaller the upper and lower tails on Bar 1 the better. 2. Bar 2 must open above the high of Bar 1. Note: Although the Mortgage Play is only a two-bar strategy, it’s often more potent after a multi-day move down (The more people trapped, the more powerful).

open

A

open

B

283

The Bullish Mortgage Play – Tactic Twelve The Setup

The Action

1. Immediately buy at the market when Bar 2 opens above the high of Bar 1. Note: This signifies that now every hedge fund, trader, and investor who sold short during Bar 1 is now in negative territory. All shorts are thrown for a loop. 2. Place your stop just below the low of Bar 1. Note: This makes for a large stop. If played this way, you must adjust your position size. Many traders may want to opt for a tighter stop based on an intraday chart. 3. Use a trailing stop strategy until a) your objective has been met, b) the low of a reversal bar has been violated or c) a gap up occurs.

Bullish Mortgage Play (+Mort)

A

Buy at Open

B

Stop Loss

The Mortgage Short Play requires a large stop, signified by the dotted red lines, are in Examples A – B. We encourage playing small due to the large stop loss. When applied properly, this pattern can produce large gains

284

Bull Mortgage Play

Bull Mortgage Play: Trader buys w/ a multiple day target. 40ma

20ma

Bearish Bar at New Low

285

Bear Mortgage Play Bear Mortgage Play: Trader shorts at open w/ a multiple day target.

WRB, 5% or more

20ma

Entry

286

Bullish Mortgage Play (+BM) ATS Discusses an alternate way to enter charts that don’t set up as nice as this.

2-Min. Chart

PBO

PBO

20ma 200ma

Bull Mortgage Play Daily Chart

287

Bearish Mortgage Play (-BM)

PSS

2-Min. Chart

Gap PSS 20ma

Bear Mortgage Play Daily Chart What is this?

288

Pristine Trading Opportunities Marking a chart up in this fashion helps to strengthen the trader’s opportunity spotting skills. To shorten the learning curve, we must learn forward (current) as well as backward (past).

CSS

PBS

Pro Gap PBO

r20ma PBS PBO

r40ma

PBS

289

Swing & Guerrilla Plays NH NH

2

3

Pristine Plays

6 8 NG 7

1) CBS 2) Failed PSS; Why? 3) PSS; Retest 4) CBS/GNS 5) Bull MP 6) Failed PSS; Why? 7) +20/20/PBS 8) +20/20/PBS NG = Novice Gap NH = New High

1 5 4 Big Vol

290

Name These 3 Guerrilla Plays 3

1

Name That Guerrilla! 1.__________________ 2.__________________ 3.__________________ 2

291

Pristine Trading Opportunities Which plays offer Guerrilla Trading entries? 3

1

7

5

13 11

9

12

8 10

2 4 6

292

Guerrilla Trading Tip

Wide Distance

Wide Distance Pristine Trading Tip: Stocks are unable to stay far from the 20ma for extended periods of time. Therefore, wide swings away from the 20ma represent the best Guerrilla Trading opportunities. Find them!

293

Name That Trade 3

1

6

4

2

5

294

Monthly Trade Opportunities 4 Name all four Pristine Trading Opportunities 1. ________________ 2. ________________ 3. ________________ 4. ________________

20ma 40ma 3 2 1

295

Trading the Pristine Method® Pristine’s #1 Micro Trading Tactic & Pristine’s Momentum Method

www.pristine.com 296

Introduction To The Late Day Breakout Play In this section, we will teach our #1 technique that will help the trader play a very astute micro-trading game. As mentioned before, we believe that the highest level of traders are not one-dimensional. The trader who has moved into that realm that we call mastery, knows how to handle himself in various dimensions, in various time frames, and with various trading styles. The micro-trade (or intra-day trade) is the most demanding of all trades, and it often requires the greatest degree of skill, and without a doubt, the greatest degree of emotional and psychological stability. The intra-day trading tactic we are about to show you forms the foundation upon which our entire micro-trading style is built. The following technique will provide the tools that we believe every micro-trader needs in order to have long-term success. Any other addition, style or approach, without the following, will not prove useful over long periods of time. Delve into the following section with all your heart and soul and you will walk away with the nuts and bolts of a skill that has the power to reward you for a lifetime.

297

Late-day Breakout Sell Late-day Breakout Criteria 1. Stock is up on the day 2. Stock is at or near its high 3. 20ma is above 200ma 4. 20ma is flat or near flat 5. Stock breaks out after 2:15

Action 1. Buy Breakout (BO) bar 2. Place stop below BO bar or base 3. Sell Away from 20ma

Buy

Stop PBO

200ma 20ma

Volume

298

2-minute Late-day Breakout Sell Late-day Breakout Criteria Buy

1. Stock is up on the day 2. Stock is at or near its high 3. 20ma is above 200ma 4. 20ma is flat or near flat 5. Stock breaks out after 2:15

200ma

20ma

Stop

Action 1. Buy Breakout (BO) bar 2. Place stop below BO bar or base 3. Sell Away from 20ma

Volume Increase

299

Late-day Breakout Action 1. Buy Breakout (BO) bar 2. Place stop below BO bar or base 3. Sell Away from 20ma

Buy

Stop

20ma

300

Intra-day Breakout Plays Trading Tip: The Pristine Breakout Trader buys pauses (bases) near the 20ma and sells rallies away from the 20ma.

Sell Area w/ Trailing Stop

Buy

Stop

301

Pristine’s Momentum Trading Approach The Pristine Trained Momentum Trader would buy 1 full lot (ex. 1,000 shares) at each PBS (1 – 4), while selling 1/2 the lot (ex. 500 shares) after several bar rallies (a – d) away from the rising 20-period moving average.

c

d

Action Steps At ‘1’ Buy 1,000 shares At ‘a’ Sell 500 shares

Tip: This is sometimes referred to us as “pyramiding” into a stock for maximum profit potential. The “momentum” positions are held as long as the stock remains above the 40-period moving average.

b a

At ‘2’ Buy 1,000 shares

3

4 At ‘b’ Sell 500 shares

r20ma 2 1

At ‘3’ Buy 1,000 shares At ‘c’ Sell 500 shares

r40ma

At ‘4’ Buy 1,000 shares At ‘d’ Sell 500 shares

2,000 shares open 2,000 shares closed Stop: Breakeven point or 40MA, whichever is higher. The ability to ride the entire trend for all its worth is the hallmark of a true master trader. The Pristine Trained Master Trader, with help from Pristine ESP™, knows which stocks to “pyramid” into, and when additional buys and sells should occur. Each arrow/number shows an additional buy opportunity, and the letters ‘a’ through ‘d’ show when partial sells could have been initiated. By buying 1,000 shares, and selling 500 shares near each letter, the Pristine Trained Momentum Trader would currently own 2,000 shares, and already taken profits on 2,000 shares. 302

Pristine’s Momentum Trading Approach e

Action Steps At ‘1’ Buy 1,000 shares

d

1-2-3 Breakout

At ‘a’ Sell 500 shares

a

b

c

At ‘2’ Buy 1,000 shares

5 1-2-3 Breakout

3 2

At ‘b’ Sell 500 shares At ‘3’ Buy 1,000 shares

4

At ‘c’ Sell 500 shares At ‘4’ Buy 1,000 shares

1 r20ma r40ma

At ‘d’ Sell 500 shares At ‘5’ Buy 1,000 shares At ‘e’ Sell 500 shares

2,500 shares open 2,500 shares closed Stop: Breakeven point or 40MA, whichever is higher.

303

Pristine’s Intra-day Momentum Trading Approach Action Steps d

At ‘1’ Buy 1,000 shares At ‘a’ Sell 500 shares

c

e

b 4 2

At ‘2’ Buy 1,000 shares At ‘b’ Sell 500 shares At ‘3’ Buy 1,000 shares

r20ma

At ‘c’ Sell 500 shares

a

3

At ‘4’ Buy 1,000 shares

Daily Uptrend, Nice Gap

At ‘d’ Sell 500 shares At ‘e’ Sell 2000 Shares

r40ma 2,500 shares open 2,500 shares closed

1

1

Stop: Breakeven point or 20MA, whichever is higher.

304

Trading the Pristine Method® Where to Go From Here

www.pristine.com

Where to Go From Here You have now learned all of the tools and patterns needed to trade anything that is bought and sold in an open market. With all of these tactics and all of the timeframes open to you, you may see many trade opportunities every day. Some will be better than others. It now becomes important that you recognize combinations of high odds tactics occurring on different time frames. The entry is important and the management is critical. Now we will take and organize all the information you have learned into three steps that should happen on every trade, and provide you with examples. These setups happen every single day.

306

Where to Go From Here

Your Next Few Days • DO NOT trade for the next few days • Review and re-read the TPM Manual • Open your trading platform and go back in time and scroll your charts one bar at a time and see if you can find the: • • • •

Stages Trends Setups Entries

307

Where to Go From Here

Your Next Few Days • Start a document called ‘What I want to trade’ and start listing things you like or do not like: • • • •

Pullbacks or breakouts What time frame How long you like to hold your plays Your favorite setups

308

Where to Go From Here ➢

Find a Picture of Power – There Are 4 You Should Look For… ➢ ➢ ➢ ➢

➢

Find the Timeframe of Focus to Play the Strategy ➢ ➢ ➢

➢

A Strong Trend on a higher timeframe A Wide Range Bar clearing significant support or resistance Extreme Relative Strength or Weakness Gapping Stocks

This will be determined by support and resistance levels on timeframes The appropriate strategy will be the one that occurs in the proper location Any strategy applies: PBS/PSS, PBO/PBD, +123/-123, Bull/Bear Trap

Find a Great Entry ➢ ➢ ➢

We are highly accurate with our pictures of power and strategies once the proper timeframe of focus is found, so be aggressive with a good entry Get in early using advanced management Consider bidding/offering with advanced management

309

+123 w/Strong Daily and Market Timing 5 Minute Stock

+123 Entry Daily PBO

Stock Strong Market Strong +123 Stop

5’ QQQ

Daily Stock

310

PBD w/Weak 60’ and Market Timing 5’ Stock

5’ QQQ

Market Weak

Stock Weak

60’ Stock PBD Stop

PBD Entry

311

Where to Go From Here

Your Next Few Days • Begin paper trading or trading small share-size: • • • • • • •

Get used to your trading platform Get used to a few stocks and how they act Learn your strategy in real time Do NOT paper trade too long as it can be false confidence (3-4wks is reasonable amt. of time) Switch to VERY small risk; like 5-10-25 dollars Commissions will be an expense of learning for a while These steps are VERY important, so don’t skip them!

312

Where to Go From Here Follow-Up Services: •

Virtual Trading Floor: The Black Room • • •

•

Focuses on day trading Open 9:00 – 4:00 ET every market day Live trading, trade explanations, scanning and daily lectures

Nightly Game Plan with Sami Abusaad • •

• • • • • •

Focuses on 2 to 5 day swing trading 1-hour live webinar sessions from Sami every Monday, Wednesday, and Friday at 4:30pm ET where he will provide multi-day swing opportunities, trade management of open positions, market bias, etc. (recordings will be provided) Step-by-step mentoring through his entire swing trading game plan. Live Q&A: Sami will answer your questions so you'll stay 100% up to speed. Sami's 100+ page Swing Trading Guide (VALUE: $295) Sami's Elite Swing Trading Course with recording (taught live during week 1 of the Program, March 20, 22, & 24) (VALUE: $100) Free quarterly live retakes of the Swing Course for as long as you are a subscriber. Custom Swing Trading Spreadsheet (VALUE: $100) to track and analyze your trades with Sami's custom-build spreadsheet.

Please talk to a Counselor for more information: info@t3livecom

313

Where to Go From Here

Future Classes • Retake of TPM will increase your knowledge. •

Highly recommended to help assimilate the information.

• Advanced Technical Strategies (ATS) is incredible to gain more understanding of how the charts work to turn those moves into money. •

•

Along with TPM this is perhaps the most important course we offer.

Advanced Gap Strategies, Advanced Management Strategies, and Advanced Scalping Techniques and more for specialized needs.

** We have course packages available so please talk to a Counselor for more information: [email protected] 314

Good Luck!

Thank You for Your Attendance

You have been given A LOT of valuable information… You have been told how to apply it… What you do now is up to YOU!

We will be here to help you! [email protected] or 888-998-3548 315