Bigote Trading Workshop - Primer - v2

Bigote Trading Workshop 09/07/2019
Bigote Trading’s Fresh Take

on Market Timing :
A Primer
DISCLAIMER
I (the man behind Bigote) make no representation that the information contained
in this material or any of the analytical tools or reports reference herein are
accurate, reliable, complete, or appropriate for use as basis of investment decisions
by the audience of this material.
I am not using this document or this representation to provide investment or other

advice. The information contained herein are intended for informational and
educational purposes only and should not be regarded as recommendation.
Investment performance after reading this material, or after attending the relevant
lecture is not guaranteed.
I shall have no liability in any way to you or any other entity for any loss or damage,
direct or indirect arising from the use of the information contained herein or any of
the analytical tools reference herein.
1
Roadmap – 1st part
PRICE SETUPS PHASES MARK-UP PLAYS

TRENDS
BEHAVIORS • Bluesky
• Accumulation PHASE • Parabolic
• Uptrend • Retrace
• Impulse • Mark-up • Base zero • Momentum
• Sideways • Reset
• Corrections • Distribution • Bases 1-5 • Bases
• Downtrend • Reversals
• Mark-down • Oversold
Bounce
A case for Market Timing
PSEI
Y2007 – 2,900
Y2019 – 7,700
While stock go up over time, retail traders are faced with

two realities:
1. Who’s got the time? (Investment horizon)
2. Who’s got the money? (Timing of cash flows)
2
Appeal of market timing
1.If something is significant, it should be reflected in

price (discounts everything)
2.There is order in price movements (trends)
3.There are patterns in price movements that tend

to appear repeatedly (history repeats itself)
Trend Analysis
(the Bigote Way)
UPTREND DOWNTREND SIDEWAYS

MA20 > MA50 >MA200 MA200>MA50>MA20 If it is not clear UPTREND nor
DOWNTREND, it must be
Sideways
MA20<MA50>MA200
MA200>MA50<MA20
3
Uptrend
Uptrend – MA50 is above MA200, while MA20 is

above MA50 (MA20>MA50>MA200)
Downtrend
Downtrend – MA50 is below MA50, while MA20

is below MA50 (MA200>MA50>MA20)
4
Sideways
Sideways – if it is not clear

uptrend or downtrend, it must
be sideways
Not an Uptrend
MA50 is above MA200, but MA20 is
below MA50 (MA20<MA50>MA200)
Not a Downtrend
MA50 is below MA200, but MA20 is
above MA50 (MA200>MA50<MA20)
PRICE BEHAVIORS
IMPULSE
a.k.a. MAGNITUDE, PRICE EXPANSION
1) Sharp change in price over a

short period of time
2) Pulling away from the moving
average
5
PRICE BEHAVIORS
CORRECTIONS
a.k.a. DURATION, PRICE CONTRACTION
1) Sideways movement in price

2) Moving towards the moving average
3) Correction can be in time or price
Impulse and Corrections

It takes Time to move Price a certain trajectory, any
exaggerated movement (impulse) in this relationship
will be paid for by an adjustment through PRICE (falling
correction) or TIME (flat correction).
Trajectory
(2) Correction in Time (flat)
Price
Impulse
(1) Correction in Price (falling)
Time
6
Flat and Falling Corrections

Trajectory
Flat & Falling
Flat
Flat
Falling
SETUPS
UPTREND DOWNTREND SIDEWAYS
MA20 > MA50 >MA200 MA200>MA50>MA20 If it is not clear UPTREND nor
DOWNTREND, it must be
Sideways
Price>MA20>MA50>MA200 MA20<MA50>MA200
Price<MA20 >MA50>MA200 MA20>MA50<MA200
7
Retrace
1. Price low touched MA20 while in uptrend
(Price Low =<MA20>MA50>MA200).
2. There should be a prior impulse, then it

retraces to MA20 in form of either flat or
falling correction, or both.
Correction
(falling) MA20>MA50>MA200
Impulse
Trades below MA20
Bluesky
Impulse
1. Price never touched MA20 while in uptrend (Price Low
>MA20>MA50>MA200).
2. There should be a prior impulse, then price halts but
never touched MA20, in form of a flat correction. Then
follow by another impulse.
Correction
(flat)
Impulse
MA20>MA50>MA200
8
Reset
1. MA50 is above MA200, but MA20 is below MA50

(MA20<MA50>MA200).
2. Trend should be coming from uptrend, then it became
sideways when MA20 crossed below MA50.
3. Potential to revert to uptrend. (Uptrend – Sideways – Uptrend)
RESETS to
Sideways
Uptrend
Uptrend
MA50 > MA200, but MA20 is

below MA50
Reversal
1. Reversals = MA50 is below MA200, but MA20 is above

MA50 (MA200>MA50<MA20).
2. Trend should be coming from downtrend, then it became
sideways when MA20 crossed above MA 50.
3. Potential to reverse to uptrend from sideways.
(Downtrend – Sideways – Uptrend)
Sideways Reverses to
Downtrend
Uptrend
9
Corrections - FRACTALS
Trajectory
Retrace
Retrace and Bluesky

Bluesky
appear as Corrections
in daily timeframe Bluesky
Retrace
PRICE BEHAVIORS - Fractals
Resets and Reversals

appear as Corrections in
weekly timeframe.
10
PRICE BEHAVIORS - Fractals
Retrace and
Bluesky appear as Retrace and
Corrections in Bluesky in the
daily timeframe daily timeframe
can form part of
Impulse in weekly
timeframe.
Market Phases
Distribution
Mark-up
Mark-down
Re-Accumulation Re-Distribution
Accumulation Wyckoff Model Accumulation
11
Trend Cycles
Up
Trend
Sideways
Up
Trend Sideways
Up
Trend
Sideways Sideways Down
Trend
Down
Sideways Trend
Down
Trend
There is always Sideways in
between Uptrend and Downtrend
Market Phases
Up Distribution
Trend
Mark-up Sideways
Distribution Up
Trend Sideways
Mark-up Up
Trend
Sideways Sideways Down
Trend
Down Mark-down
Sideways Trend
Mark-down Accumulation
Down
Trend
Accumulation Bigote Model
12
Cycle of Setups
Failed RESET - MA20
broke below MA200
Distribution
Uptrend
(Retrace & Bluesky)
Mark-up Mark-down
Uptrend
(Retrace & Bluesky)
Re-Accumulation
Re-Distribution
Sideways (Reset) Failed Reversal - MA20
broke below MA50
Accumulation Accumulation
Sideways (Reversal) Sideways (Reversal)
Market Phases
Wyckoff Model BIGOTE Model
Trends Setups
Accumulation Latter part of Downtrend to Reversals
Sideways
Mark-up, including re- Latter part of Sideways to Bluesky and Retrace

accumulation Uptrend Reversal
Reset (re-accumulation)
Distribution Latter part of Uptrend to Failed Reset
Sideways
Mark-down, including re- Latter part of Sideways to Inverse Retrace and Bluesky
distribution Downtrend Failed Reversal
13
Mark-up Phase
1.Composed of Impulse and Corrections.

2.Corrections form Bases.
Mark-up Phase
3. Bases can be a Big Base
(Reversal and Reset Setups) or
Small Bases (Bluesky and
Retrace).
14
BIGOTE Base Counting Principles

1. Reversal and Reset Setups will always reset the count to zero.
2. Base 1 starts from the first time RSI(14) visited the level 70, coming from
either Reversal or Reset setups
3. Coming from above level 70, RSI(14) should have retraced at least 10
points for a base to have a valid base:
a) If RSI(14) went as above as 90, it should retrace below 80 and should
go back above 90.
b) If RSI (14) went above 80, it should retrace below 70 and should go
back above 80.
c) If RSI (14) went above 70, it should retrace below 60 and should go
back above 70
Base Counting Principles
15
BIGOTE BASE COUNTING Principles

Valid Base Not Valid
RSI (14) -
The best Bases to enter a stock are bases 1-3

Distribution
“late stages”, “abrupt
base failures occur more
frequently”
“Little more obvious Mark-down

but usually still
tradeable”
“Best time for Mark-up

jumping on board a
new trend”
Image sourced from
page 81 of Trade Like a
Accumulation Stock Market Wizard
(2013) by Mark Minervini
16
Plays Criteria Exits

Based on Hernan Segovia’s work on Parabolics (with some -Low of the first pause day
tweaks)
-50% of the range of the long candle
PARABOLICS Parabolic State = RSI(30) is above 72, instead of 70. (>8% low to high)
-MA5
Momentum RSI(14) above 70 + RSI(30) above 60 Same as Parabolics
Bases 1-3 Previous Swing low or MA20
Conservative = RSI(14) >=60 with valid retracement + If PSEi is MA20>MA50, hold position
Positive MACD Histogram until MA20 is broken, don’t take profit.
Bases
Aggressive = RSI(14) >=60 with valid retracement + If PSEi is MA50<MA20, take profit at
Rapunzel targets and break of MA10.
Uptrend Oversold = Uptrend + RSI(14) dipped below 40 + MA5

break of MA5/lowest high
Oversold Bounce Break of succeeding highest lows
Downtrend Oversold = Downtrend + RSI(14) dipped below
30 + ADX >30 + break of MA5/lowest high
PARABOLICS
17
Momentum
Bases – RSI(14)>60 + MACD Histogram
18
Bases – RSI(14)>60 + Rapunzel Method
1. MAs 5, 10 and 20 should be aligned in

ascending order (i.e., MA5>MA10>MA20)
2. If not, look for the “tangled” MA, viz:
a) If MA5 is between MA10 and MA20, MA5
is the tangled MA.
b) If MA10 is below MA20, MA10 is the
tangled MA.
3. Buy signal happens when price crossed above
the tangled MA, thereby “untangling” to
order.
Bases – RSI(14) + Rapunzel Method
19
Uptrend Oversold
Downtrend Oversold
20
End-of-Day or Intraday?
1 trading day 4.5 trading
hours
1 hour (1) 60-minute;
(2) 30-minute;
(4) 15-minute;
(12) 5-minute;
(20) 3-minute;
(60) 1-minute
Simple
Moving 60-minute 30-minute 15-minute 5-minute 3-minute 1-minute
Average
SMA1 5 9 18 54 90 270
SMA5 23 45 90 270 450 1,350
SMA10 45 90 180 540 900 2,700
SMA20 90 180 360 1,080 1,800 3,400
SMA50 225 450 900 2,700 5,500 13,500
End-of-Day or Intraday?
21
Activity
Identify the following:
1. Types of Plays
2. If a Base Play, count the
bases
3. Entry
4. Cut-loss level
5. Assume you have Php
300,000, compute position
size.
22
23
24
25
26
Roadmap – 2nd part
STOCK PICKING BIGOTE TRADING

• Visuals SYSTEM FOR-ALL-
• Rankings SEASONS (BTS-FAS)
VISUALS - QUADRANTS
Improving Leading
(-) YTD (+) YTD
Shorter- (+) MTD (+) MTD
period
Returns
(e.g., MTD)
Lagging Weakening
(-) YTD (+) YTD
(-) MTD (-) MTD
Longer-period Returns (e.g., YTD)
27
Improving Leading
Lagging Weakening
Volume Filters
1. Daily value average above 1 million + Daily

volume is greater than or equal to 20-day
volume average (volume break-out); or
2. 20-day volume value average is greater than

or equal to 5 million
28
Look for
OUTLIERS
Momentum Efficiency Frontier
Names above this line are

efficient = i.e., highest
possible reward for
smallest possible risk
29
Bigote Substitution
MOMENTUM RANKINGS
30
VOLATILITY = ATR(14) / Price
Volatility = same as ATR(14)

of Investagrams Terminal
31
Bigote-Trading-System (BTS)
For-All-Seasons (FAS)
Watchlists:
1. Outliers in the Bigote Quadrants

2. Above 80 in Swabeness Index
Tools:
1. Stochastics (14,3,3)
2. Parabolic SAR (0.02,0.02,0.2)
3. ADX 14
Rules:
1. If ADX is below 30 (non-trending), follow trading rules of Stochastics
2. If ADX is above 30 (trending), follow trading rules of ADX
32
Reminders
Copyright
All rights reserved. No part of this Primer may be reproduced,

distributed, or transmitted in any form or by any means, including
photocopying, recording or other electronic or mechanical methods
without the written permission of Traders Lemonade Group and its
principals.
33

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Bigote Trading Workshop 09/07/2019

Bigote Trading’s Fresh Take

I am not using this document or this representation to provide investment or other

Roadmap – 1st part

PRICE SETUPS PHASES MARK-UP PLAYS

A case for Market Timing

While stock go up over time, retail traders are faced with

Appeal of market timing

1.If something is significant, it should be reflected in

2.There is order in price movements (trends)

3.There are patterns in price movements that tend

UPTREND DOWNTREND SIDEWAYS

Uptrend – MA50 is above MA200, while MA20 is

Downtrend – MA50 is below MA50, while MA20

Sideways – if it is not clear

1) Sharp change in price over a

1) Sideways movement in price

Impulse and Corrections

Flat and Falling Corrections

Flat & Falling

Price<MA20 >MA50>MA200 MA20>MA50<MA200

2. There should be a prior impulse, then it

1. MA50 is above MA200, but MA20 is below MA50

MA50 > MA200, but MA20 is

1. Reversals = MA50 is below MA200, but MA20 is above

Retrace and Bluesky

PRICE BEHAVIORS - Fractals

Resets and Reversals

PRICE BEHAVIORS - Fractals

Accumulation Wyckoff Model Accumulation

Mark-up, including re- Latter part of Sideways to Bluesky and Retrace

1.Composed of Impulse and Corrections.

BIGOTE Base Counting Principles

Base Counting Principles

BIGOTE BASE COUNTING Principles

The best Bases to enter a stock are bases 1-3

“Little more obvious Mark-down

“Best time for Mark-up

Plays Criteria Exits

Uptrend Oversold = Uptrend + RSI(14) dipped below 40 + MA5

Bases – RSI(14)>60 + MACD Histogram

Bases – RSI(14)>60 + Rapunzel Method

1. MAs 5, 10 and 20 should be aligned in

Bases – RSI(14) + Rapunzel Method

Roadmap – 2nd part

STOCK PICKING BIGOTE TRADING

Longer-period Returns (e.g., YTD)

1. Daily value average above 1 million + Daily

2. 20-day volume value average is greater than

Momentum Efficiency Frontier

Names above this line are

VOLATILITY = ATR(14) / Price

Volatility = same as ATR(14)

1. Outliers in the Bigote Quadrants

All rights reserved. No part of this Primer may be reproduced,

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