How to Trade Parabolic

Reversals
Presented By:
Aiman

1
 Disclaimer
• BearBullTraders.com employees, contractors, shareholders and affiliates, are NOT
an investment advisory service, a registered investment advisor or a broker-
dealer and does not undertake to advise clients on which securities they should
buy or sell for themselves.
• You understand that NO content published as part of the BearBullTraders Room
and its Website constitutes a recommendation that any particular investment,
security, portfolio of securities, transaction or investment strategy is suitable for
any specific person.
• You further understand that none of the creators or providers of our Services or
their affiliates will advise you personally concerning the nature, potential, value
or suitability of any particular investment, security, portfolio of securities,
transaction, investment strategy or other matter.

2
 Outline
1. Introduction
1. Why trade reversals.
2. Why is it difficult to catch a reversal and some common mistakes.
3. What is a Parabolic Reversal.
4. Type of Reversals: A)Parabolic Reversals. B)Extreme Reversals

2. Reversal Candles

3. Climactic Volume

4. Parabolic Reversals
• Rules
• Examples
• Exceptions
• What to avoid

5. Where to Find Stocks for Parabolic Reversals.

3
 Introduction
1. Why trade reversals:

A)It keeps us from chasing a trending stock stock.

B)Good R/R

C)It could be a good strategy for contrarians.

2. Why is it difficult to catch a reversal:

A)Every red candle seems to be a reversal.

B)Sometimes stocks never reverse intraday.

C)It’s difficult to catch it against a clearly trending stock

C)FOMO.

4
 Introduction
4)Why is it Called Parabolic Reversal:

5
 Introduction
4)Why is it Called Parabolic Reversal:

6
 Introduction
4)What type of reversals do we trade:

1)Parabolic or Climactic reversals

-We don’t aim for a full reversal, but if it happens it’s a bonus
2)Extreme Reversals
-We aim for a full reversal closer to VWAP or Below(Part 2)

7
Introduction:Parabolic VS Extreme
Reversals:PICS!!

8
Introduction:Parabolic VS Extreme
Reversals:PICS!!

9
Parabolic Reversals: Why do they work?

1. Stocks never go straight up or down forever.

2. At some point buyers/sellers will get exhausted and will start taking
profits which causes the stock to pullback to the last pivot or even more.

10
 2-Reversal Candles
1. Tweezers:
-Tweezer Top: It consists of two candlesticks, one bullish
candle, second bearish candle.

-Tweezer Bottom: It consists of two candlesticks, one bearish

candle, second bullish candle.

11
2-Reversal Candles and Patterns

-Evening Star: An evening star pattern consists of three

candles:
1)Large white candlestick
2)Small-bodied candle
3)Red candle

Morning Star: A morning star pattern consists of three

candles:
1)Large red candlestick.
2)Small-bodied candle
3)White candle

12
2-Reversal Candles and Patterns
-Shooting Star: Consists of small body candle and a long
upper shadow:

-Hammer: Consists of small body candle and a long lower

shadow:

13
2-Reversal Candles and Patterns
-Spinning Tops/Bottoms: Consists of small-bodied candle centered between
long upper and lower wicks

14
 3)Climactic Volume
-Climactic Volume: Climactic volume appears at
the end of a bullish or bearish move that is
visualized by at least 2x size of the average
volume last 10 volume bars.
-Climactic Volume like any volume formed is a
result of supply and demand factors, it forms
because of momentum traders, market makers,
HFTs

15
Rules: Parabolic Reversals
Rules:
5-Minute Chart 2-Minute Chart 1-Minute Chart
1)Clear 1)Clear 1)Clear
uptrend/downtrend uptrend/downtrend uptrend/downtrend
2)Stock to be extended of 2)Reversal candle/pattern 2)Reversal Candle/Pattern
the 9EMA
BONUS: Confirmation 3)New 2-minute low/high 3)New 1-minute low/high
candle
Confirmations:
1)Climactic volume
2)Daily level or strong moving average on one of the time frames
3)False Breakout
Note: The stock must not have 200 SMA between the entry point and the profit target on any time
frame!
Entry: New 1 or 2 min low/high
Stop loss:
-Half of the wick, high/low of the previous or 1- or 2-min candles body or HOD/LOD

16
Common Questions
-Are there any exceptions to get an earlier entry?
1)Huge ASK (wall) on level 2.
2)At least 4 Criteria's met

-What time of the day this strategy works best?

-Anytime!

-How extended should the stock be of the 9EMA on the 5-minute chart?
1)It should be at least 2-3% above/below the 9EMA on the 5 min chart
2)It should offer at least 4R to the 9EMA on the 5-minute chart

-When do we use new 1-min low for an entry and when do we use new 2-min low for the
entry?
-If the price action on the 1-minute chart is so clear with no fake 1-minute low we could use
the 1 to enter; However, if the one-minute chart offered many fake new 1-minute lows it’s
better to watch for a new 2-minute low

17
Examples: Classic new 2 Min low after Parabolic move

18
Examples: Classic new 2 Min low after Parabolic move

19
Examples: New 1 min low

20
Examples: Fake Breakout

21
Examples: Fake Breakout

22
Examples:

23
Examples:

24
Examples:

25
Examples:

26
Examples:

27
Examples:

28
Examples:

29
Examples:

30
Exception Examples: huge wall(ASK)

31
Exception Examples: huge wall(BID)

32
Exception Examples: Early Entry

33
Exception Examples: Early Entry

34
How Long Should I hold before taking any partials?:

35
How Long Should I hold before taking any partials?

36
How Long Should I hold before taking any partials?

37
How Long Should I hold before taking any partials?

38
4)Where to Find Stocks for Parabolic Reversals
1)Gappers List

2)Multi-Strategy Scanner

3)Any extended stock you lay your eyes on

39
4)Where to Find Stocks for Parabolic Reversals

40
4)Where to Find Stocks for Parabolic Reversals

41
4)Where to Find Stocks for Parabolic Reversals

42
4)Where to Find Stocks for Parabolic Reversals

43
Don’t get confused!!

44
AVOID WEDGES!

45
46