Oliver Velez - Core Trading For A Living

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
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 Key Events

3 to 5 Bar Set-ups
Tail Set-ups
COG Set-ups
The Strategies
Mighty MA Play
Pristine Buy/Sell Zone
CBS & CSS Plays
Putting It All Together
Introduction
Introduction
The Major Time Shift
Fact # 1
Fact # 2
20 years ago, the

typical investor
looked to hold a
stock position for
4 years, on
average.
Today, the
typical investor
looks to hold a
stock position for
4 months.
Pristine Theories
Theory # 1
We believe, the
investors average
holding period for
any stock will drop
to 4 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 vs. Technical
Fact # 1
Fact # 2
20 years ago,
fundamental
analysis was
considered the
only proper way
to make market
decisions
Today, the
purely
fundamental
analyst is
virtually extinct.
Mark Douglas, author of
The Disciplined Trader and Trading In
The Zone
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.
V) Charts are the foot prints of these actions and reactions
VI) In other words: Charts Dont Lie!
The Building Blocks
Foundation
Four Styles of Trading
Types of Trading
Four Styles of Trading: Core; Swing; Guerilla; Micro
Which fall into.
Two Broad Trading Categories: Wealth; Income
Two Broad Trading Categories

Wealth Trading Styles
Core Trading
Income Trading Styles

Guerilla Trading
- Weekly Charts
- 60 Min & 30 Min
- Weeks to Months
- Hours to Days
Swing Trading
Micro Trading
- Daily Charts
- 5 Min & 15-Min
- Days to Weeks
- Minutes to Hours
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!
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.
months
2) There are two forms of Core Trading: Macro; Micro
3) This style of trading has become the new form of investing.
investing
4) The Core Trader uses weekly charts to make entries and exits.
5) Core Trading is best used on key stocks and indices.
indices
6) Core Trading is the key to capturing substantially bigger gains
than the swing and/or day trader is accustomed to.
7) Core Trading is style of trading that can be practiced by ALL!!
ALL
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!
Chart Courtesy of MasterTrader.com
Shorts!
Macro vs. Micro Core Trading

Micro Core Trader Sells!
Macro Core Trader Sells!

Key Point: The Macro Core
Trader looks to ride the
entire (macro) move, while
ignoring the temporary
weekly set backs.
Key Point: The Micro Core

Trader only looks to ride
one color, primarily. This is
the no pain approach.
r20ma
Micro Core Trader Sells!
r40ma
r40ma
Macro Core Trader Buys!
r20ma
Micro Core Trader Buys!
Charts Courtesy of MasterTrader.com
Core Trading Chart (QQQ)

S
CSS
3-5
Candlestick Bars
S
20ma
B
BT
40ma
20ss
3-5
3-5
Pristine Charting Power!!
Color Coded Volume
B
CBS
Volume Climax
Core Trading Tools
Tools of the Core Trade

Charting Tools: Weekly charts displayed in
Japanese Candlestick form.
Technical Tools: Color coded volume; 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
Japanese Candlesticks
3) 20sma
4) 40sma
B
B
r40ma
Color coded Volume
B
r20ma
The Weekly Battle
Determining Who Won The Battle
High
High
Low
Close
Open
Open
Close
Low
Bulls Win
Bears Win
Pristine Capital Holdings, 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.
However
If the Bulls or Bears win significantly more than

5 battles in a row, a catastrophic loss will be the
price paid for such an abnormal winning streak.
3 Key Pristine Events
The Key Events
3 to 5 Bar Rallies
Pictures of Greed
Think Sell
Think Sell
Think Sell
3 Bars Up
PristineUp
Capital Holdings, Inc.5 Bars Up
4 Bars
3 to 5 Bar Rallies
Pictures of Pain
Think Buy
3 Bars Down
Think Buy
Think Buy
4 Bars Down
5 Bars Down
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
Count Your Way to Profits
5 Green Bars
4 Red Bars
3 Red Bars
3 Red Bars
Bull & Bear Tails
Bottoming & Topping Tails

Topping Tail (TT)
Bottoming Tail (BT)

Topping Tail Play I

Topping Tail
Topping Tail
1) 6 Up Bars in a row
2) Topping Tail (TT)
6-Up
6-Up
$160 Catastrophe!
The Party is Over!
r20ma
r40ma
r20ma
r40ma
Bottoming Tail I
1) 6 Down Bars in a row
2) Bottoming Tail
Its Party Time!
110% Party!
6-Down
Bottoming Tail
r40ma
6-Down
Bottoming Tail
r20ma
r40ma
r20ma
Bull & Bear COG
Changing of the Guard (COG)

Bear COG
Bull COG
Bear Changing of the Guard

Topping Tail
Bear COG
2) Bear COG
Topping Tail
Bear COG
5-Up
5-Up
$120 Catastrophe
The Party is Over!
r40ma
r40ma
Changing of the Guard Plays

Bear COG
4 Up Bars
5 Down Bars
3 Up Bars 3 Up Bars
5 Down Bars
3 Down Bars
Tails
Bull COG
Bull COG
Bull COG
4 Up
Bars
Pristine Core Trading Strategies
The Strategies
Mighty 20ma Plays
The Powerful 20ma Play

r20ma Play
d40ma
r20ma
d40ma Play
20 MA Play I
1) Rising 20 MA (r20ma) +
3) r20ma > r40ma =
Stock Will Rally Off r20ma
3 D/Bars
3 D/Bars
r20ma
r40ma
20 MA Play II
3) r20ma > r40ma =
Stock Will Rally Off r20ma
r20ma
r40ma
20 MA Play III
1) Declining 20 MA (d20ma) +
d20ma
d40ma
3) d20ma < d40ma =
Stock Will Decline Off d20ma
20 MA Play IV
d20ma
d40ma
3) d20ma < d40ma =
Stock Will Decline Off d20ma
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 Buy Zone Play I
r20ma
r40ma
Pristine Buy Zone Play II
r20ma
r40ma
Pristine Sell Zone Play I

d20ma
d40ma
Pristine Sell Zone Play II
d20ma
d40ma
Climactic Buy & Sell Set-up
Climactic Buy & Sell Set-ups
Climactic Buy
Snap
Back
to 40
ma
20ma
Wide Distance
Wide Distance
40ma
rs
Ba
wn
Do
ore
rM
3o
ma
to 20
Back
Snap
3o
rM
ore
Up
Bar
s
Climactic Sell
Climactic Sell Set-up I

2TT
2TT
2) 2 Topping Tails (TT)

3) Wide Distance from 20ma
The Party is Over!
6-Up
6-Up
$75 Catastrophe
r20ma
r40ma
Climactic Sell Set-up II

3TT
3TT
2) 3 Topping Tails (TT)

6-Up
4) Climactic Volume
6-Up
$85 Catastrophe
The Party is Over!

r20ma
r40ma
r20ma
r40ma
Climactic Volume
Climactic Sell Set-up III

1) 5 Up Bars in a row Tail/COG
Tail/COG
5-Up
5-Up
3) Bearish COG
$70 Catastrophe
The Party is Over!

r20ma
r20ma
r40ma
r40ma
Climactic Buy Set-up I

d20ma
d20ma
Its Party Time!
125% Party!
1) 9 Down Bars in a row 9-Down
2) Climactic Volume
3) Far from 20ma
Climactic Volume
9-Down
Climactic Volume
Climactic Buy Set-up II

2) Bullish COG
3) Far from 20ma
d20ma
d20ma
6-Down
COG
6-Down
A 100% Party
COG
Its Party Time!
Climactic Buy Set-up III

2) Climactic Volume
3) Bullish COG
4) Far from 20ma
d20ma
4-Down
$12 Party
4-Down
Its Party Time!
COG
COG
Climactic Volume
Climactic Volume
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
3) Far from the 20ma
Location
Tools & Tactics A Must Read

A Japanese proverb says, If you
wish to know the road, inquire of
those who have traveled it. The
authors of Tools and Tactics for
the Master Trader clearly know
the road. Their unique insights,
trading tactics and powerful tools,
so enjoyably presented, make
this a book that belongs on every
traders shelf.
Steve Nison, CMT - Author of
Japanese Candlestick Charting
Techniques

Oliver Velez - Core Trading For A Living

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Pristine.

Core Trading for a Living

Founder of Pristine.com, and Author of the best selling book,

The Key Events

The Major Time Shift

20 years ago, the

The Dynamics of Change

What has led to this dramatic change?

Fundamental vs. Technical

The Dynamics of the Analytical Shift

What has led to this dramatic shift?

The Building Blocks

Four Styles of Trading

Two Broad Trading Categories: Wealth; Income

Two Broad Trading Categories

Income Trading Styles

- 60 Min & 30 Min

- 5 Min & 15-Min

The Pristine Philosophy

Core Trading Defined

What is Core Trading?

Core Trading vs. Investing

Core Trader Sells!

Core Trader Shorts!

Chart Courtesy of MasterTrader.com

Macro vs. Micro Core Trading

Macro Core Trader Sells!

Key Point: The Micro Core

Micro Core Trader Sells!

Macro Core Trader Buys!

Micro Core Trader Buys!

Charts Courtesy of MasterTrader.com

Core Trading Chart (QQQ)

Chart Courtesy of MasterTrader.com

Core Trading Tools

Tools of the Core Trade

Technical Tools: Color coded volume; 20 & 40

Weekly Chart with Volume

Core Trading Tools

Color coded Volume

The Weekly Battle

Determining Who Won The Battle

An Important Statistical Fact

If the Bulls or Bears win significantly more than

3 Key Pristine Events

The Key Events

Pristine Capital Holdings, Inc.

Count Your Way to Profits

Pristine Capital Holdings, Inc.

Chart Courtesy of MasterTrader.com

Count Your Way to Profits

Pristine Capital Holdings, Inc.

Chart Courtesy of MasterTrader.com

Bull & Bear Tails

Bottoming & Topping Tails

Bottoming Tail (BT)

Topping Tail Play I

The Party is Over!

Pristine Capital Holdings, Inc.

Chart Courtesy of MasterTrader.com

Its Party Time!

Pristine Capital Holdings, Inc.

Chart Courtesy of MasterTrader.com