Dan Gibby - Mastering Breakouts and Breakdowns

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    Mastering BreakoutsMastering Breakouts

    and Breakdownsand Breakdowns

    Dan GibbyDan Gibby

    Lead Moderator, Pristine.com Advanced Stocks and DerivativesLead Moderator, Pristine.com Advanced Stocks and DerivativesTrading Room, and Senior Pristine Certified TrainerTrading Room, and Senior Pristine Certified Trainer

    Copyright 2006, Pristine Capital Holdings, Inc.Copyright 2006, Pristine Capital Holdings, Inc.

    Pristine.com PresentsPristine.com Presents

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    DisclaimerDisclaimer

    It should not be assumed that the methods, techniques, or indicators presented in this book and 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 ACTUALTRADING. 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. 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.

    Day Trading can result in large losses and may not be an activity suitable for everyone.

    Copyright 1994-2006 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.

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    Table of ContentsTable of Contents

    IntroductionIntroduction

    The Pristine Method

    Trading Style and Time Frames

    Trading Plan

    Basics and FoundationBasics and Foundation

    Initial Pristine Breakout/Down

    PBO/PBD from Wide Range Bars

    PBO/PBD from Gaps

    Retracement After Breakout/Down

    Secondary Breakout/Down

    Late Day Breakout/Down

    Gaps Negated in Morning

    Fluid moves vs. Congestion

    Wide Range Bars (WRB)

    Volume

    Quality Consolidation

    Pristine ESP

    Concluding ThoughtsConcluding Thoughts

    Breakout/down StrategiesBreakout/down Strategies

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    What This Seminar isNot About

    4

    The intricacies of The Pristine Method (TPM)

    Tools, tactics, or setups taught in TPM Parts 1-2

    Trading Plan and Managing Your Trading Business

    Risk management, proper share size, psychological aspects

    Futures, options, commodities, and derivatives

    Classical, technical, macro, or fundamental analysis

    Level II analysis or direct access trading

    Other topics included at Pristine Trading University

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    Introduction toIntroduction toThe PristineThe Pristine

    MethodMethod

    5

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    Who is Pristine?Who is Pristine?

    Established in 1994 by Oliver Velez and Greg Capra,

    Pristine provides insight, intelligence and education for

    the self-directed trader

    Much more than stock tips and buy-sell-hold advice, The

    Pristine Method guides both new and experienced

    traders to a more intuitive understanding of the markets

    The Pristine educational system helps you understand the

    markets and prepare you to trade objectively

    Offer worldwide educational seminars, DVDs, trading

    software, real-time trading rooms, and trading newsletters6

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    ONSITE SEMINARS

    REAL TIME TRADING ROOMS

    DVD

    The BOOK

    ONLINESEMINARS

    NEWSLETTERS

    COACHING

    Eliminating The Barriers To Entry!

    Pristine Capital HoldingsPristine Capital Holdings

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    RANKED # 1RANKED # 1 in Trading Education

    by: FEATURED by:

    Pristine Public RecognitionPristine Public Recognition

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    Traits of a Successful TraderTraits of a Successful Trader

    Trading is a Business treat it like one!

    Choose a definedMethod

    Choose a time frame in which to trade from

    Choose which stocks and/or Futures you will trade

    Money Management

    Discipline and Patience to followyour Method 9

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    Pristine Successful Trader MatrixPristine Successful Trader Matrix

    COMPELLING TECHNICAL PATTERNTPM 1-2

    TRADING PLAN

    MANAGE IN BETWEEN

    ENTER AND SET PROTECTIVE STOP

    Wealth/Income

    Hardware/Software

    Setups

    Instruments

    Listed/OTC

    Reward-Risk

    Share Size and #

    Market Internals

    Management Rules

    Pivots For Exits

    Winning/losing

    Trade Review

    Continuing Education

    Demon elimination

    Discipline/Patience

    NO SETUP,

    NO TRADE!!

    StopTarget10

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    Trade Types

    The Pristine Method teaches specific Compelling Patterns

    These should be clearly highlighted in your Trading Plan

    PBS/PSS

    CBS/CSS

    Guerrilla Trades

    Breakouts and Breakdowns

    W and M Formations

    Pinch Play

    Failed Patterns

    Bearish Gap that Bullies11

    PBS

    +COG

    CBS

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    Breakout andBreakout andBreakdownBreakdownFoundationFoundation

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    Introductory ConceptsIntroductory Concepts

    Bases and consolidations

    Types of breakouts and

    breakdowns

    Quality of setups

    Fluid versus choppy moves

    When to trade with or against

    the intended move

    Using Pristine ESP

    Congestion

    areas

    Fluid move

    leaves little

    congestion

    Concept Review

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    Price CongestionPrice Congestion

    Prices move between areas of

    support and resistance

    Congestion areas have

    overlapping bars, tails, and

    gaps

    Fluid moves have consecutive

    bar moves with relatively equal

    openings and closings

    Prices retrace easier without

    congestion to the left

    Congestion

    areas

    Fluid move

    leaves little

    congestion

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    IntraIntra--Day Pattern Into CloseDay Pattern Into Close

    Hourly EOD Base

    Opening price here

    has higher odds of

    retracementOpening Gap above

    Base has high odds

    of moving up

    15-Min.15-Min.

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    Volume AnalysisVolume Analysis

    Volume = Money and represents commitment or lack thereof

    Price tells us what a stock is doing; Volume tells ushow

    > 500,000 average 30-day volume

    Volume increases should occur in the

    direction of the PBO/PBD; reduced

    Volume on Retracement

    Volume increase without price moving is a warning

    Volume is secondary to price . Price is King! 16

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    Proper Base or Consolidation

    Consolidation is aresting periodin an existing trend

    Want controlled, tight consolidation, with few to no

    overlapping bars or significant gaps and tails

    Base of at least 8 - 10 bars

    Provides the base of support for breakout, or base of

    resistance if break down

    Low risk, high-odds strategy using The Pristine Method

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    Quality ConsolidationQuality Consolidation

    Tight arrangement of bars

    with few tails, overlapping

    bars, and gaps 18

    20MA

    20MA

    20MA

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    Improper Basing/ConsolidationImproper Basing/Consolidation

    Poor consolidation: tails,

    overlapping bars, and gaps 19

    20MA 20MA

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    Pristine ESPPristine ESP

    Pristi