Pristine.

com Presents

Guerrilla Trading Tactics
With

Oliver L. Velez

Founder of Pristine.com, and Author of the best selling book, Tools and Tactics for the Master Day Trader
Copyright 2002, Pristine Capital Holdings, Inc.

Disclaimer
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 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. 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. Guerrilla Trading can result in large losses and may not be an activity suitable for everyone. Copyright © 1994-2002 by Pristine Capital Holdings, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright A of 1976, no part of this publication may be ct 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.

Table of Contents

Introduction
The Bullish 20/20 Bar The Bearish 20/20 Bar

Guerrilla Trading Tactics Part I
The Pristine Gap-n-Snap Play – Tactic One The Pristine Gap-n-Crap Play – Tactic Two Bullish Gap Surprise – Tactic Three Bearish Gap Surprise – Tactic Four Bullish 20/20 Play – Tactic Five Bearish 20/20 Play – Tactic Six

Table of Contents Guerrilla Trading Tactics Part II The Bull Trap – Tactic Seven The Bear Trap – Tactic Eight The Bearish Mortgage Play – Tactic Nine The Bullish Mortgage Play – Tactic Ten Putting It All Together Guerrilla Trading BRCM Guerrilla Trading MU Guerrilla Trading LLTC .

Introduction Introduction .

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

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

The following tactics enjoy such a high degree of statistical accuracy that many of our professional in -house traders focus on them exclusively to earn their living in the markets. We have always taught that the professional trader needs only 2 to 3 highly reliable trading tactics in his or her arsenal in order to earn a comfortable living trading. They do not often result in very large gains. With these 10 Guerrilla Trading Tactics. In advance. we ’d like to say. The tactics contained in this brief course were designed specifically for the professional trader who seeks a frequent number of trading plays each day. but the consistency of their wins makes them an indispensable addition to your trading arsenal. You are about to be made aware of 10 such tactics.Guerrilla Trading – A Brief Description The Guerrilla style of market play is our most cherished form of trading. Guerrilla Tactics are designed for the trader who desires to “grind” out profits over a 1 to 2 day time frame.” . “Welcome to Pristine’s Professional Trading Circle. we believe your trading will be taken to an entirely new level.

the open should be in the lower 20% of the period’s range. Bullish Bullish 20/20 Bar 20/20 Bar Close at or Close at or near the top of near the top of the bar’s range the bar’s range Open at or Open at or near the near the bottom of the bottom of the bar’s range bar’s range . Bullish 20/20 bars are far more important when they occur after at least one prior up bar. We call it 20/20 because as a general rule.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. Several proceeding up bars make the 20/20 more significant. making a long. and the close should be in the upper 20% of the period’s range. green colored candlestick.

The Bullish 20/20 bar signifies that many traders and investors are already long.The Bullish 20/20 Bar Important Points Bullish 20/20 bars form the basis of many trading techniques. Bullish Bullish 20/20 Bar 20/20 Bar Close at or Close at or near the top of near the top of the bar’s range the bar’s range Open at or Open at or near the near the bottom of the bottom of the bar’s range bar’s range . This last fact is what sets up a possible reversal to the downside. Bullish 20/20 bars have more significance when they occur “after” a decent move to the upside. We look for at least one prior up bar.

making a long. Bearish 20/20 bars are far more important when they occur after at least one prior down bar. We call it 20/20 because as a general rule. Several proceeding down bars make the 20/20 more significant. the open should be in the upper 20% of the period’s range. Open at or Open at or near the top near the top of the bar’s of the bar’s range range Bearish Bearish 20/20 Bar 20/20 Bar Close at or Close at or near the near the bottom of bottom of the bar’s the bar’s range range .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. solid dark candlestick. and the close should be in the lower 20% of the period’s range.

This last fact is what sets up a possible reversal back to the upside. The Bearish 20/20 bar signifies that many traders have already sold.The Bearish 20/20 Bar Important Points Bearish 20/20 bars form the basis of many trading techniques. Open at or Open at or near the top near the top of the bar’s of the bar’s range range Bearish Bearish 20/20 Bar 20/20 Bar Close at or Close at or near the near the bottom of bottom of the bar’s the bar’s range range . Bearish 20/20 bars have more significance when they occur “after” a decent move to the downside. We look for at least one prior down bar.

Tactics Part I .

The Pristine Gap–n–Snap Play . .Tactic One This method works best as a one. this tactic can enjoy an 84% accuracy rate.to two-day trading tactic. It works best on volatile NASDAQ stocks above $20 per share or NYSE stock above $40. Properly used.

.Tactic One The Setup / The Action 1. At least $1. 2. The stock should be down at least two days in a row. 3. We need a wide-range bar on the current day. 4.00 . Stock down 2 days in a row.The Pristine Gap–n–Snap Play . The open of the current day must be in the top 20% of the day’s price range. The close must be in the bottom 20% of the day’s price range.

3.05 to $0. . whichever comes first.05 to $0. Stock gaps down at the open.50 or more.The Pristine Gap–n–Snap Play . Sell for a $2 plus profit or on the 3rd day.10 below the current day’s low. Place a protective stop $0.10 below the current day’s low.Tactic One The Setup / The Action Stock down 2 days in a row. Buy long at $0.10 above the previous day’s low. and then begins to rally back.10 above the previous day’s low.05 to $0. Stop loss $0.05 to $0. If the stock gaps open to the downside by $0. 2. buy it $0. 1.

this tactic can enjoy an 84% accuracy rate.Tactic Two This method works best as a one.The Pristine Gap–n–Crap Play .to two-day trading tactic. It works best on volatile NASDAQ stocks above $20 per share or NYSE stocks above $40. Properly used. .

3. 4. At least $1. Stock up 2 days in a row. We need a wide-range bar on the current day. The stock should be up at least two days in a row.The Pristine Gap–n–Crap Play / Tactic Two The Setup / The Action 1. . The close must be in the high 20% of the day’s range.00. 2. The open must be in the low 20% of the day’s range.

whichever comes first.05 to $0. 2. and then begins to fall back. 1. 3.05 to $0.50 or more. Sell short at $0.10 above the current day’s high. Cover for a $2 plus profit or on the 3rd day.05 to $0. If the stock gaps open to the upside by $0.10 below the previous day’s high. sell (short) $0. Stop loss $0. Stock up 2 days in a row. .10 below the previous day’s high.The Pristine Gap–n–Crap Play / Tactic Two The Setup / The Action Stock gaps up at the open . Place a protective stop $0.05 to $0.10 above the current day’s high.

com .Gap n Snap Play Sell Buy Gap n Snap Chart Courtesy of Mastertrader.

Gap n Crap Play Gap n Crap Short Cover Chart Courtesy of Mastertrader.com .

Bullish Gap Surprise – Tactic Three

This method works best as a one- to two-day trading tactic.

It works best on volatile NASDAQ stocks above $20 per share or NYSE stocks above $40.

Properly used, this tactic can enjoy an 84% accuracy rate.

Bullish Gap Surprise – Tactic Three The Setup / The Action
1. The stock should be down at least two days in a row. 2. We need a wide-range day of at wideleast $1.00. 3. The open must be in the top 20% of the day’s range. day’ 4. The close must be in the bottom 20% of the day’s range. day’ 5. Above average volume on the current day (optional).
Above average or climactic volume. Stock down 2 days in a row.

Bullish Gap Surprise – Tactic Three
The Setup /

The Action
Stock down 2 days in a row.

1. If the stock opens (gaps) up by at least $0.50 to $1 above the previous day’s closing price, buy it immediately. You can also buy it above the first 5min. high (Conservative). 2. Place a protective stop $0.05 to $0.10 below the prior day’s low. 3. Sell for a $2 to $3 plus profit or on the 3rd day, whichever comes first.

Stop loss $0.05 to $0.10 below the prior day’s low.

Stock gaps up at the open. Buy immediately.

Above average or climactic volume.

It works best on volatile NASDAQ stocks above $20 per share or NYSE stocks above $40.to two-day trading tactic. this tactic can enjoy an 84% accuracy rate . Properly used.Bearish Gap Surprise – Tactic Four This method works best as a one.

The open must be in the bottom 20% of the day’s range. Above average or climactic volume. 4.Bearish Gap Surprise – Tactic Four The Setup / The Action 1.00. 3. The stock should be up at least two days in a row. Stock up 2 days in a row. . Above average volume on the current day (optional). We need a wide-range day of at least $1. 5. The close must be in the top 20% of the day’s range. 2.

You can also sell it short below the first 5 min. whichever comes first.10 above the prior day’s high. 1.Bearish Gap Surprise – Tactic Four The Setup / The Action Stock up 2 days in a row. Above average or climactic volume. Stock gaps down at the open. Sell immediately. Place a protective stop $0.50 to $1 below the previous day’s closing price. Cover for a $2 to $3 plus profit or on the 3rd day. . If the stock opens (gaps) down by at least $0. 2.05 to $0. sell (short) it immediately.10 above the prior day’s high.05 to $0. Stop loss $0. 3. low.

com .Bullish Gap Surprise (+BGS) Bull Trap +BGS +BGS +BGS Chart Courtesy of Mastertrader.

Bullish Gap Surprise (+BGS) +BGS Bullish Gap Surprises Chart Courtesy of Mastertrader.com .

com .Bearish Gap Surprise (-BGS) -BGS Major Support Chart Courtesy of Mastertrader.

Bullish 20/20 Play – Tactic Five This method works best as a one.to two-day trading tactic. Properly used. It works best on volatile NASDAQ stocks above $20 per share or NYSE stocks above $40. this tactic can enjoy an 84% accuracy rate .

1. The open must be in the top 20% of the day’s range. Stock down 2 days in a row.Bullish 20/20 Play – Tactic Five The Setup / The Action This play has slightly better odds on the bullish side. The close must be in the bottom 20% of the day’s range. . Above Average Volume. The stock should be down at least two days in a row. 2. Above average volume on the current day (optional). 3. We need a wide-range day of at least $1. 4.00. 5.

. Buy Rule. whichever comes first. Then.10 below the lowest low of the last two days.05 to $0.Bullish 20/20 Play – Tactic Five The Setup / The Action Stock down 2 days in a row. 1. whichever is lower. wait for 30 minutes of trading to transpire. Use 30-Min.50 point above or below the previous day’s low.05 to $0. 3.05 to $0. buy the stock an $0. Above Average Volume. Stop loss $0. 2. Sell for a $2 plus profit or on the 3rd day. Place a protective stop $0. Stock opens relatively even.10 above the high established during the first 30 minutes of trading.10 below the current day’s low or the previous day’s low. If the stock opens less then $0.

Bearish 20/20 Play – Tactic Six This method works best as a one. . Properly used. It works best on volatile NASDAQ stocks above $20 per share or NYSE stocks above $40.to two-day trading tactic. this tactic can enjoy an 84% accuracy rate.

Bearish 20/20 Play – Tactic Six The Setup / The Action 1. 5. The open must be in the bottom 20% of the day’s range. 3.00. 4. The stock should be up at least two days in a row. 2. Stock up 2 days in a row. Above Average Volume . Above average volume on the current day (optional). We need a wide-range day of at least $1. The close must be in the top 20% of the day’s range.

Place a protective stop $0.10 above the current day’s high or the previous day’s high. whichever is higher. sell short the stock $0.05 to $0.05 to $0. Then. If the stock opens less then ½ point above or below the previous day’s high. whichever comes first. Stock up 2 days in a row. 3. Cover for a $2 plus profit or on the 3rd day. Use 30-Min. wait for 30 minutes of trading to transpire. Above Average Volume Stock opens relatively even. 2.10 below the low established during the first 30 minutes of trading. Sell Rule. .Bearish 20/20 Play – Tactic Six The Setup / The Action Stop loss $0.05 – $0. 1.10 above the highest high of the last two days.

Bear 20/20 Play Bear 20/20 .

Tactics Part II .

When the Bull Trap fails though. It is best used as a multi-day strategy. this tactic can enjoy an incredible 91% accuracy rate. and can result in huge gains. . It should be played with smaller than normal trading lots. Properly used. it can result in a big loss.The Bull Trap – Tactic Seven This method works accurately on stocks in all price ranges.

3. 4. 2.The Bull Trap – Tactic Seven The Setup / The Action 1. Above average volume on the current day (optional). The close must be in the top 20% of the day’s range. The current bar must represent a very bullish day. The open must be in the bottom 20% of the day’s range. A B C D . Note: Preferably this day has been proceeded by a multi-day upward move.

Place a protective stop $0.05 to $0. 2. A B C D The dotted red lines in Examples A – D show where the trader goes short.05 to $0.10 above the current day’s high or the previous day’s high. Short the stock $0. whichever comes first. Keep in mind that the Bull day does not need to be as wide as the typical 20/20 day. as it is hard to determine if the stock will remain below the low of the Bull day. 3.The Bull Trap – Tactic Seven The Setup / The Action 1. Note: Some traders may prefer to short the stock near the close.10 below the low of the prior day (the Bull day) if it ’s been violated. . Cover for a $2 to $3 profit or on the 5th day. whichever is higher . The key to this strategy lies in the “immediate” break to the downside.

The Bear Trap – Tactic Eight This method works accurately on stocks in all price ranges. and can often result in huge gains. It should be played with smaller than normal trading lots. . this tactic can enjoy an incredible 91% accuracy rate. When the Bear Trap fails though. Properly used. it can result in a big loss . It is best used as a multi-day strategy.

2.The Bear Trap – Tactic Eight The Setup / The Action 1. Note: Preferably this day has been proceeded by a multi -day down move. 3. The open must be in the top 20% of the day’s range. A B C D . 4. Above average volume on the current day (optional). The current bar must represent a very bearish day. The close must be in the bottom 20% of the day’s range.

3. Note: Some traders may prefer to buy the stock near the close. whichever comes first.10 above the high of the prior day (the Bear day) if it’s been violated.05 to $0. Place a protective stop $0. Buy the stock $0. 2. whichever is higher. Cover for a $2 to $3 profit or on the 5th day.The Bear Trap – Tactic Eight The Setup / The Action 1. Keep in mind that the Bear day does not need to be as wide as the typical 20/20 day. as it is hard to determine if the stock will remain above the high of the Bear day. A B C D The dotted red lines in Examples A – C show where the trader goes long. .10 below the current day’s low or the previous day’s low.05 to $0. The key to this strategy lies in the “immediate” break to the upside.

Bear Trap Chart Courtesy of Mastertrader. The Guerrilla Trader got two solid signals to go short UTX.com .Bull & Bear Traps Bull Trap * * The Bull Trap was a Bearish Gap Surprise Play first.

com .Bear Trap Play Sell Buy Bear Trap Chart Courtesy of Mastertrader.

com .Bear Trap Play Short Bear 20/20 Play Sell Cover Buy Bear Trap Chart Courtesy of Mastertrader.

Properly used. This short tactic is actually a derivative of the Bull Trap.The Bearish Mortgage Play – Tactic Nine This short method. but is best applied to the 60-min time frame at the open. It is also an excellent intra-day tactic. this short tactic can enjoy a 94% accuracy rate (3 to 10 day holding period on average). while accurate. will deliver huge losses when it fails. .

The Bearish Mortgage Play – Tactic Nine The Setup / The Action 1. Note: The Mortgage Play is only a two -bar strategy. This is the bar that indicates that a large number of longs have been committed. Bar 1 must be a bullish 20/20 bar. 2. A B Open . Note: The smaller the upper and lower tails on Bar 1 the better. Bar 2 must open below the low of Bar 1.

Short at Open B 3. The Mortgage Short Play requires a great deal of faith on the part of the trader. Note: This makes this tactic very 1. he must have the stomach and the proper size bank account that can handle taking the large loss without much damage. We encourage playing small. unless the range of Bar 1 is not that big and the gap down is not that large or severe. Immediately short at the market when Bar 2 opens below the low of Bar 1. Note: This signifies that now every hedge fund. Not only must the trader wholeheartedly believe in the accuracy of the strategy. Many traders may want to opt for an arbitrary stop.The Bearish Mortgage Play – Tactic Nine The Setup / The Action 1. A 2. the loss is typically risk. ? . and investor who bought during Bar 1 is now in negative territory. b) the high of a reversal bar has been violated or c) a gap down occurs. large. Note how far away the stops. Big potential gains go hand in hand with big potential losses. high risk . if need be. are in Examples A – B. trader. If it fails. Place your stop just over the high of Bar 1. All longs are thrown for a loop. mutual fund. Use a trailing stop strategy until a) your objective has been met. signified by the dotted red lines.

this long tactic can enjoy a 94% accuracy rate (3 to 10 day hold on average). . but is best applied to the 60-min time frame at the open. Properly used. while accurate.The Bullish Mortgage Play – Tactic Ten This long method. will deliver huge losses when it fails. This long tactic is actually a derivative of the Bear Trap. It is also an excellent intra-day tactic.

2. This is the bar that indicates that a large number of traders have sold. Bar 2 must open above the high of Bar 1. Note: The Mortgage Play is only a two -bar strategy. Open A B . Bar 1 must be a bearish 20/20 bar. Note: The smaller the upper and lower tails on Bar 1 the better.The Bullish Mortgage Play – Tactic Ten The Setup / The Action 1.

b) the low of a reversal bar has been violated or c) a gap up occurs. All shorts are thrown for a loop. the loss is typically large. are in Examples A – B. ? . he must have the stomach and the proper size bank account that can handle taking the large loss without much damage. trader.The Bullish Mortgage Play – Tactic Ten The Setup / The Action 1. unless the range of Bar 1 is not that big and the gap up is not that large or severe. Place your stop just below the low of Bar 1. We encourage playing small. and investor who sold short during Bar 1 is now in negative territory. Big potential gains go hand in hand with big potential losses. Note how far away the stops. if need be. signified by the dotted red lines. A Buy at Open B 3. Not only must the trader wholeheartedly believe in the accuracy of the strategy. Many traders may want to opt for an arbitrary stop. If it fails. 2. Use a trailing stop strategy until a) your objective has been met. The Mortgage Short Play requires a great deal of faith on the part of the trader. Note: This signifies that now every hedge fund. Immediately buy at the market when Bar 2 opens above the high of Bar 1. Note: This makes this tactic very high risk.

com .Bull Mortgage Play 10 Days Later Buy Bull Mortgage Play PBS Chart Courtesy of Mastertrader.

Bearish Mortgage Play Bearish Mortgage Play Short 10 Days Later Chart Courtesy of Mastertrader.com .

Putting It All Together Bear Mortgage Play Short Sell 10 Days Later Buy Bull Gap Surprise Bear Trap Chart Courtesy of Mastertrader.com .

com .Putting It All Together Bear 20/20 Bull Trap -BGS & Bull Trap Bear Trap +BGS Bull 20/20 Chart Courtesy of Mastertrader.

com .Putting It All Together Failed Bear 20/20 Bear 20/20 Bull 20/20 Plays Bull Gap Surprise Bull 20/20 Play Bull Gap Surprise Chart Courtesy of Mastertrader.

Putting It All Together Pristine CSS -BGS PBS Bull Trap Gap n Snap Big Volume Chart Courtesy of Mastertrader.com .

com .Putting It All Together Bear 20/20 Bearish Gap Surprise Bear Trap Chart Courtesy of Mastertrader.

Putting It All Together PBS PBS 200 MA Chart Courtesy of Mastertrader.com .

pristine.com.Pristine’s Guerrilla Trading Manual Pristine’s Guerrilla Trading Manual is available for download at: www.com/guerilla. COPYING AND OR ELECTRONIC TRANSMISSION OF THIS DOCUMENT WITHOUT THE WRITTEN CONSENT OF PRISTINE.COM IS A VIOLATION OF THE COPYRIGHT LAW .htm © Copyright 1995-2002. Pristine. All rights reserved.

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