Concepts

PIVOTS

WIDE RANGE BARS (WRB)

2 BAR RULE

PIVOTS

What is a Pivot? The Dictionary defines a pivot as a "central point around which
something turns. “And that's all there is to it.

These turning points are there all over the place in our charts, making definite
lower pivot highs and lows, so that a break is enough for us to get long.

Vice versa for getting short

The only criterion is that this point has to be visually obvious……it is a clear cut
point…..not something that you need to see using microscopes, or magnifying
glasses.

Standing away from your computer, you must be able to make out your pivot.

A Pivot High is the high of a price bar which is higher than the highs of the bars
surrounding it.

A Pivot Low is the low of a price bar which is lower than the lows of the bars
surrounding it.

A it is not about 5 bars or 3 bars….it is not about major and minor, small or
big…..it is just a point which is visually obvious to the simpleton watching a chart.

WIDE RANGE BARS (WRB)

As the name suggests, its a bar which has a range wider than the average bars
that we have for that security. There is no specific definition of what should be
the range to a bar to define is as a

WRB, but going through a few charts will make it amply clear.
Apart from the wider range, what we have to look for in a WRB is that it should
have a bigger body and smaller tails…meaning there should ideally be lesser
difference between the open and high/low as well as close and high/low
depending on whether it is a bullish or bearish bar. In no case should third
difference exceed 20% of the total range of the bar.

2 BAR RULE

2 bar rule states that we move our stops to the High of the bar which is placed 2
bars before the before the current bar.

Now this rule is NOT used as a matter of routine in this method. There are certain
preconditions which kick in the applicability of this rule:

(a) There should be no Pivots or reversal points nearby. If pivots or reversal points
are at least 5 bars away, then only should we use this rule.

(b) The move should be vertical. A limping move with smallish bars will not kick in
this rule, even if the pivots are more than 5 bars away.

(c) There should be at least 1 biggish bar in the 5 bars between the pivots and the
current bar so that we can use this rule.

Table of Contents

ENTRY AND EXIT

ENTRY and REVERSAL POINTS

ADDS

CANDLESTICK PATTERN, TECHNICAL PATTERNS, SUPPORTS/RESISTANCE

ADVICE
ENTRY AND EXIT

This is an "always in the trade" type of a method and each Reversal point is an
Entry point for the new trade in the opposite direction. We will talk about when
and where to enter and reverse in the subsequent paragraphs

ENTRY and REVERSAL POINTS

A.PIVOTS:-Let us talk shorts, as the case is always to talk in terms of long-Lower

Pivot

Highs and Lows, visible ones, visually obvious ones, every breakdown to new lows
is an opportunity to bring stops down to the latest pivot high. Keep doing this till a
previous pivot high is broken. A break of that pivot high and we exit all Short
positions—-initial as well as Adds and enter initial positions Long. It's as simple as
it can be, just focus on 2 things: (a) visual (b) new lows, then move stops.
REVERSAL is 15 points below the previous pivot low in case of Nifty. This 15 points
is what we call a "Filter" and it varies with each security depending on its price
and volatility.

B.2 BAR METHOD:—In a vertical move, where there are no pivots, move stops to
the high of 2 bars back in a down move……move stops to the low of 2 bars back in
an up move. REVERSAL is 20 points below/above 2 bars back(taking Nifty as an
example).

Why are we suddenly using 2 bars? Well, a euphoric rise or a Panic drop doesn't
give an opportunity to move stops, in such cases we take the help of the 2 bar
method to place stops.

Be careful, we don’t want you using the 2 bar after say 3 up bars, We want huge
WRB in a vertical rise.
C.VISUAL GAPS:

A visual gap is simply a gap that can be seen visually and we utilize them in our
strategy whether we get them against or in our position.

Gaps Against:

Say you are holding a Short position and the market next day opens against you
and beyond your existing stops. You would reverse at the opening 5 min bar high
plus a filter of 20points (taking

Nifty as an example) to get out of Shorts into Long position

In case you are holding Longs and the market next day opens below your existing
stops, you would reverse at the opening 5 min bar low minus a filter of 20points
(taking Nifty as an example) to get out of Longs into Short position.

Scenario 1: You are holding Short positions in Nifty Futures, and market gaps
down visually and below the existing pivots. You would add at the opening bar
low less filter (say 7 in case of nifty). The stops then are moved as per the 2 bar
method or pivots whichever gives a closer stop. Wait ideally for a lower pivot to
form to get a better Reversal point.

Scenario 2: You are holding Long positions and market gaps up visually on your
60min charts. Wait for the first bar to close. If this bar is Red….meaning thereby it
has a closing lesser than the opening……reverse to Shorts at this opening bar low-
filter (20points say for Nifty). If the subsequent bars keep going higher, nothing to
be done except Adding at the opening bar high plus filter and then moving the
stops to the opening bar low.

Scenario 3: You are holding Long positions and market gaps up visually on your
60min charts. Wait for the first bar to close. If this bar is Green….meaning thereby
it has a closing higher than the opening……move stops as per the 2 bar method
unless a pivot is closer than that. If the subsequent bars keep going higher,
nothing to be done except Adding at the opening bar high plus filter. Wait ideally
for a higher pivot to form to get a better Reversal point.

D.FAILED BREAKOUT BAR REVERSAL: Supposing a bar takes out a Pivot high and
puts us out of Short position into a fresh Long position. Now supposing we are
NOT able to take out the highs of this BREAK OUT BAR, we get an indication that
the break out was false…and so we reverse to SHORTS again below the low of the
break out bar minus the filter. IF we have a breakout in the Direction of the trend,
and then it fails, we have ample reasons to reverse our positions. Whether we are
sitting with initial positions or with adds, a failure of a breakout/breakdown is a
great place to reverse and capitalize on.

E.END OF DAY REVERSAL: Imagine holding a Long position, initial along with adds.
A counter move happens, takes out the pivot lows and puts you out of that trade
into a fresh Short position. Now, by the end of that trading day, we should have a
closing below the pivots which had put us into that trade. Inability to have a
stronger close in our favor would mean that the breakout lacked strength and
hence we need to reverse our position back to Longs. And when we use the

End of day reversal…we reverse with full position…Original as well as Adds which
we held before entering this Short Trade. Vice versa for Shorts

As an example….say we are long 4 lots of Nifty and add 6 more lots on our way. A
reversal happens and we enter into Shorts with 3 or 4 lots. Now in case we have
an End of Day reversal that day…we will get Long with our original position of 10
lots behaving as if the Shorts we took that day did not happen at all.

ADDS

This is the real meat of the system. We keep adding to our winning position while
not correspondingly increasing our overall risk. Depending on the nature and
trend-worthiness of the security, we can Add 2 to 5 times in a security. Since each
Add point comes on the breach of a pivot or WRB, we would be moving our stops
up or down. Therefore the overall risk even after the Adds is either the same or is
reduced, but certainly not increased beyond a point.

A few points to note in this regard:

(a) While adding, we take into consideration the pivots we make during our
current trade. A pivot which occurred 2 or 3 days before we entered our current
position is of no interest to us and so we don’t use it for adds.

(b) In case of an opening in the direction of our trade which is beyond any pivot or
previous high of the current trade, we Add above/below the high/low of the
opening bar with a small filter. For example, say the previous day high/pivot was
at 3000 and next day we have the opening 5min bar high at 3040..we would add
to our position at 3040+7(supposing Nifty).

(c) Preferably, we should Add the same quantity as we had in our initial trade.
However, care should be taken so as to ensure our Money management system
should be comfortable with the size of Adds we take.

(d) As written, we decide on how many times we Add in a security depending on

its trendiness.

As an example, we would suggest the following number of Adds in a few popular

nifty stocks.

Nifty: Initial Position+3 ADDS

Aban: Initial Positions + 5 ADDS

RelCap: Initial Position + 3 ADDS

L&T: Initial Position + 3 ADDS

JP Associates: Initial Position + 3 ADDS

CANDLESTICK PATTERN, TECHNICAL

PATTERNS, SUPPORTS/RESISTANCE

:-None required or going to be utilized.

ADVICE

More active intervention is required especially on gap days……..but other than the
right amount of action, no more than that is required. Don’t go around over
scrutinizing, over analyzing once the processes are looked into, your job is to stay
out of the way between yourself and the trade. Your job is to get the direction
right and allow the Market to do all the hard work and put money in your pockets
while you sip your coffee and laze around.

Table of Contents

The Method

ENTRY: The Possibilities:

ADDS

PROFIT TAKING

The Method

The Daily Flow, like the 60min Flow, is an always in the trade type of a method.

ENTRY: The Possibilities:

a. Visually Obvious Pivots: This would be most of the time the point where
the Reversal is taken. Once again, the pivot is a pause or correction in price
movement, and the pivot that we take has to be visually obvious.
b. 2 Bar Method: Only employed in a vertical WRB move. Reversals are taken
2 bars back from the present bar. Not every vertical move is this strategy
employed, only where WRB come into play.
 c. High Volume WRB after an uptrend A monster bullish WRB after an
uptrend on high volumes followed by a bearish bar that closes 50% of the
preceding WRB, and we reverse below the low of the bearish bar. Once the
WRB forms, the trail stop is already placed at the low of that WRB filter.
The day of the bearish bar requires the bar to close below the 50% mark of
the previous WRB. The following day will see us reversing below the lows of
that bearish bar
d. Failure Patterns: Various type of failure patterns that necessitate us to
change directions without waiting for a pivot confirmation.
e. Gaps: Multiple up days, preferably a WRB or 2 as well, followed by a huge
gap up and we reverse the direction after waiting for the first 5min of
market activity. Even better when the gap up is to an area of supply. More
info on this already under Gaps in the Foundations Section but more will be
discussed here as well.

ADDS

If capital allows it, take 2 adds in addition to the initial position, the size smaller,
half to third ,in comparison to the Initial Size. Like in the 60min Flow, the add is
only over/below a visually obvious pivot or over/below a WRB.

Introduction To The Daily Flow

Table of Contents

An Introduction

The Daily Flow is nothing but the same Flow Strategy applied onto the Daily
Charts if the 60min Flow can give heartburn, then this timeframe can give a heart
attack if not position sized properly. And if all the processes are looked into, then
the profits that it can give is equally stupendous. The rules are almost similar to
the 60min Flow with a few variations.

Once again, we are into playing both sides of the market…..Once again, we are
trying to keep the

"I" out of the decision making process.

This method is not for those with insufficient capital……neither is it for the faint
hearted. This method is a roller coaster ride to great profits, so stay away from it
if you are not a Roller Coaster type of a person. It can hurt you big time and
reward you big time careful, you've been warned!

For those who are still inclined to follow this method, let's get deeper into it.

Introduction To The 60min Flow Method

The system you are about to read is based on the philosophy of trend trading. In
layman terms, we want to be Long when the market is rising, and Short when
they are falling. The rules are on the next page and going through the forum,
blogs you will be able to see many trades taken with this method.

In this method, we trade the 60min chart only. No perspective charts here. No
looking at trends on higher time frames. We buy previous pivot highs on the
60,we hold, and we exit once previous pivot lows are broken, and we go short,
We hold, and then cover and go long once previous pivot highs are taken out. It's
an always-in-the-trade type of method.

There is no analysis here, no thinking, just going with the flow up and down. The
only work done is position sizing, maybe adding to positions; one keeps one's
mind away from opinionating about the larger time frames. A larger time frame
crash will involve you into it, a euphoric rise up will have you in it, the frustrating
sideways will probably get you in and out a few times but would be reduced if
stops are placed in the right zones.

Intraday Mini Flow!

To clear out a few cobwebs in the Intraday

Intraday Mini Flow!

DISCUSSION 1: THE MOVE1/2 CONCEPT

We already have a Larger Moving Filter in place so that some false moves can be
done away with. It is not fool proof, but it has saved us from some unnecessary
fake outs and false breakouts earlier on in the day. The basic concept is that the
very next bar——in Indian stocks and futures, NIFTY, That would mean the 10:00-
10:30am bar must take out the high of the first bar. If it does, we are in the trade
with our stop losses below the low of that first bar……..so far so good.

If it doesn't, and BAR 2 doesn't take out the filter over BAR 1,although it made
new highs the next bar, BAR 3,must take out the highs of BAR 2 with the same
move filter larger filter).We want that big move to get us into the trade, or else,
none at all.

Let us now say that BAR 3 has completed in its formation and voila, BAR 3 takes
out the highs of BAR 2 and still not crossed the Move filter. We are still not in the
trade now the

Question is: Could we say that this is Move 1?

Before that, what is the Move 1/2 Concept……..once again, words to describe
something as always. Move filter happens when we get higher pivot highs and
higher pivot lows, without our filters triggering. In short we have a weak uptrend,
not taking out our filters. Our Move 1 meanwhile is raised bar by bar, when price
declines to form a higher pivot low, the Move Filter stays at its last increased
price. Once newer highs are made, the Move Filter is raised again bar by bar.

All through this, higher pivot highs and lows are made without our filters
triggering an entry we call this Move 1.

When the latest pivot low is broken to the down, this is what we mean by Move 2
our entry on the short side is below the low of the previous pivot low -small filter.
From that time, it is all about the small filters.

So back to our first question, is that a Move 1 - 3 bars, all HH and HL…….Answer is:
Not. Yet, we don't have sufficient data with us as of now.

Also, it is no more called the Move 1/2 Concept if it triggers a trade in the first
place even before a full Move 1 is in effect then, it's all as usual. Trade trigger will
lead to stops with small filters anyway and then all as usual…..so to say Move 1
must meet all the criteria above.
DISCUSSION 2: THE WRB -HOW DO WE REACT TO IT?

The Intraday MiniFlow is a Today Only Flow. We have all kinds of bars that form in
a trading day. One of the most exciting is the WRB. The WRB is a bar that is bigger
than all the previous bars from a visual perspective. It is a bar that has its open
near its lows and its close at or near its highs. How do we tackle this WRB?

There are 2 types of WRBs that we encounter on an intraday basis.

a. The Continuation WRB: We have our stops in place; we have had 2 or 3 up

bars and then a WRB. If your stops were at LOD, or at previous pivots, move
stops to the low of the WRB -filter. Simple as that……the WRB is a good
move in the direction of our trade. Negation of that WRB is enough for us
to call it quits and reverse. A WRB in a continuation pattern can go on to
make higher highs and lows as well, or it could be the heralding of the end
of that move. We do not, as flow traders, want to get in between a good
trade, and yet, we want to reverse if the latter scenario happen, Therefore,
stops to the low of the WRB - filters.

In a scenario, where the WRB is huge, rather a Monster WRB……Move stops to

the 33% mark of that massive WRB.

This is calculated by calculating the difference between the Open and

Close of that bar(not high and low) and divided by 3-filter(put a wider filter than
usual).If this is hit, reverse. In a scenario, where the first bar is a bearish bar after
the massive wrb, we now wait to see its action. If that 33% mark is hit, we reverse
and go short. If that 33% is not hit, and it closes below the 50% mark of the
previous WRB, raise stops to the low of that bearish candle- filter. If it hits, we
reverse. Another scenario is that price moves huge, not triggering the 33% mark,
but goes below the 50% mark, note: we are waiting for its close. if that close is
below the 50% mark, we do as above. If it isn't, we wait with our stops at the 33%
mark.
Note: This above scenario is only when we get that monster wrb in a continuation
move. A normal wrb continuation move, we do nothing. We wait with raised
stops at the low of the wrb.

b. The Breakout WRB: Once again, this is a WRB that breaks out of a
consolidation or pullback past its previous pivot highs…..same as above,
once the WRB is completely formed, we raise our stops to the low of the
WRB. Next we observe the next bar……if it closes below the 50% mark,we
reverse below the low of that bearish bar. If it closes above the 50% mark,
we wait with our stops below the low of the wrb.

Here again, if we get a monster WRB Breakout…….we raise our stops to the 33%
mark-wide filter. We wait for the following bar. If the bar closes above the 50%
mark, we wait with our SAR at the 33% mark. If the bar closes below the 50%
mark, we reverse below the low of that bar.

Note the differences between the continuation WRB and the breakout WRB.