Pristine.

com Presents

Core Trading for a Living
With

Oliver L. Velez

Founder of Pristine.com, and Author of the best selling book, Tools and Tactics for the Master Day Trader
Copyright 2001, Pristine Capital Holdings, Inc.

Table of Contents

Introduction
The Major Time Shift The Major Analytical Shift Fundamental vs. Technical

The Key Events
3 to 5 Bar Set-ups Tail Set-ups COG™ Set-ups

Foundation
Four Styles of Trading Core Trading Defined Core Trading vs. Investing Macro Core vs. Micro Core The Never-ending Battle Tools of the Core Trade

The Strategies
Mighty MA Play Pristine Buy/Sell Zone™ CBS™ & CSS™ Plays Putting It All Together

Introduction

Introduction

The Major Time Shift

Fact # 1 20 years ago, the typical investor looked to hold a stock position for 4 ½ years, on average.

Fact # 2 Today, the typical investor looks to hold a stock position for 4 ½ months.

Pristine Theories

Theory # 1
We believe, the investor’s average holding period for any stock will drop to 4 ½ weeks…. inside of 2 years!!

Theory # 2
Long-term Investing, commonly referred to as the “buy-andhold” approach, is becoming less effective by year!

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

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

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

The Building Blocks Foundation .

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

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

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

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

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

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

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

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

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

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

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

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

3 Key Pristine Events The Key Events .

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

Inc.3 to 5 Bar Rallies Pictures of Pain Think “Buy” 3 Bars Down Think “Buy” Think “Buy” 5 Bars Down Pristine Capital Holdings. 4 Bars Down .

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

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

Bull & Bear Tails Bottoming & Topping Tails Topping Tail (TT) Bottoming Tail (BT) Pristine Capital Holdings. . Inc.

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

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

Bull & Bear COG Changing of the Guard (COG) Bear COG Bull COG Pristine Capital Holdings. . Inc.

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

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

Pristine Core Trading Strategies The Strategies .

Inc.Mighty 20ma Plays The Powerful 20ma Play r20ma Play d40ma r20ma Pristine Capital Holdings. d40ma Play .

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

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

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

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

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

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

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

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

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

Climactic Buy & Sell Set-up Climactic Buy & Sell Set-ups Climactic Sell ma ma to 20 to 20 Back Back Snap Snap 3o rM ore Up Bar s 40ma Wide Distance Snap Back to 40 ma rs rs Ba Ba wn wn Do Do ore ore rM rM 3o 3o Wide Distance 20ma Pristine Capital Holdings. Climactic Buy . Inc.

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

Inc.com .Climactic Sell Set-up II 1) 6 Up Bars in a row 2) 3 Topping Tails (TT) 3) Wide Distance from 20ma 4) Climactic Volume 6-Up 6-Up 3TT 3TT $85 Catastrophe r20ma r40ma r20ma r40ma The Party is Over! Climactic Volume Pristine Capital Holdings. Chart Courtesy of MasterTrader.

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

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

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

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

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

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