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Charge Up Your Trading Using The Presented By:

Lightning Bolt Pattern Peter

Charge Up Your Trading Using The Presented By:

Lightning Bolt Pattern Peter

Disclaimer
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 What is the Lightning Bolt Pattern?
The Lightning Bolt is a Trend Continuation Pattern that:

1. Is part of an existing trend

2. Crosses the VWAP

3. Hesitates and pulls back

4. Then gathers new strength into the trend and continues

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The Trend Is Your Friend – Use It!

VWAP

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 What is the VWAP?

Volume
Weighted σ (Shares Traded x Share Price)
=
Average σ Shares Traded

Price
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 What is the VWAP?
It is not a Moving Average!

Moving Averages – measure the average price over time

VWAP – measures the average price by volume over time

Note that the VWAP is also unique compared to a MA

as it is the same in all (intraday!) timeframes

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 Why Do We Care?
The VWAP is a trading benchmark that is widely used by:

➢ Institutional investors and mutual funds who use VWAP as key

determination of profitability

➢ Market Makers who use VWAP to manage price stability

➢ Retail traders who use VWAP to determine trends

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The Lightning Bolt

VWAP

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The Lightning Bolt

VWAP

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NOT The Lightning Bolt

VWAP

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NOT The Lightning Bolt

VWAP

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3rd Touch Method
The Lightning Bolt Double Confirmation Method

2nd Partial

2nd Partial 1st Partial

1st Partial Entry

Stop loss
Entry VWAP
Stop loss

Success Probability: 60% Success Probability: 67%

30% 0.5R 33% 0.5R
30% 8R+ 34% 6R+
Failure Rate: 40% -1R Failure Rate: 33% -1R
Average Return: ~1.6R Average Return: ~1.9R

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3rd Touch Method
The Lightning Bolt Double Confirmation Method
1st Partial

1st Partial 2nd Partial

2nd Partial 1st Partial

1st Partial Entry

Stop loss
Entry VWAP
Alternate Stop loss
Stop loss

Alternate Stop loss

Success Probability: 50% Success Probability: 67%
25% 0.5R 33% 0.5R
25% 2R+ 34% 2R+
Failure Rate: 50% -1R Failure Rate: 33% -1R
Average Return: ~0.12R Average Return: ~0.5R

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 Trade Assumptions
• Partials are taken as follows:
• 1st partial- 2xRisk
• 2nd partial- 4xRisk
• 3rd + partial(s)- at major support/resistance, trend reversal or consolidation
areas

• 1st partial is 25% of original size and all other partials are 50% of
remaining size

• Once a partial is taken, the trade is ALWAYS exited at break-even

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 Lightning Bolt Conditions
• Stock should be mid- to large float and have an event catalyst on the day

• Works best when a stock has higher that average volume (i.e. RVOL is >100%)

• The pullback (through VWAP) is less than 1/2 of the trend move to get to VWAP

• Trend volume should be strong (i.e. above the average of the day)

• Supported by the overall market direction (in the moment)

• Markets are neither highly choppy nor strongly directional (unless you catch the trend early!)

• Can be played anytime from 9:40am – 3:00pm, but the best trades often set-up from 9:40am - 11am

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 Lightning Bolt Examples
• I trade primarily off of the 1-min chart…but ALWAYS watch multiple
timeframes
• DIS
• AMD
• MSFT
• FB
• AMD
• TSLA (replay)

Note that some days this pattern will be more prevalent than
others. Trade it as it appears!
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 Stop loss
Entry
1st partial
2nd partial

3rd partial

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 Partials: 25% + 37.5%+ 37.5%
Stop loss 2R + 4R + 14R
Entry
Return: 0.5R + 1.5R + 5.25R = 7.25R
1st partial
2nd partial

3rd partial

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No trade

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 -1R loser
No trade

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Pullback >50% of trend
Trade return: 2.5-10R

Pullback <50% of trend

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Very exciting entry! 1st trade return: 0.5R
2nd trade return: 6.5-9R

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Pullback >50% of trend

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Trade return: 4-6.5R

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Trade return: 2-3.5R

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Trade return: 2-7R

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 Replays

$TSLA – 1 & 5min Sep 15, 2020 10:30am

Time permitting:
$AAPL – 1 & 5 min Sep 15, 2020 11:10am

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 Final Lesson
Personally, I never EVER* take a trade the 1st
time it goes through VWAP as >95% of the time
it will pull back through!

*Unless I fail to follow my strategies….which, unfortunately, does happen on occasion

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