U Turn Manual

U-Turn Trading
System
Investing Lab – U-Turn Trading System
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Page 2
Table of Contents
Introduction 4
Pivot Reversals 5
Example of Pivot High Bar 5
Example of Pivot Low Bar 6
Example of Both High/Low Bars 7
Pivot Frequency & Significance 8

Example of Pivot High 9
Example of Pivot Low 10
The Setup 11
Example of Long U-Turn Setup 11
Example of Short U-Turn Setup 12
The Entry 13
Example of U-Turn Buy Entry 13
Example of U-Turn Sell Entry 14
The Stop Loss 15

Example of Stop Loss U-Turn Buy 15
Example of Stop Loss U-Turn Sell 16
The Exit 17
Example of Long Exit 17
Example of Short Exit 18
U-Turn Software 19
Putting It All Together:

Rules for Trading U-Turn Buys 21
Example of a Long Trade 22
Rules for Trading U-Turn Sells 26

Example of a Short Trade 27
Final Thoughts 31
Page 3
Introduction
Being a trade-aholic, I’m always reading books, reviewing courses, and
searching online for new ideas that will help improve my trading. While
searching online one weekend (no trades to put on), I noticed that
there were a lot of people offering information about pivots and pivot
points, resistance, and support; not anything new. I even noticed that
several brokers were offering pivot calculators.
This started me to thinking about pivot points, pivot point reversals

and swing bars; and other chart patterns. I have used pivot points, in
the past, to help find Fibonacci retracement lines as well as using
these chart patterns in my trading. However, I had not thought of
using them exclusively as a trading system. Then I remembered
reading about pivot point channels in “The Encyclopedia of Technical
Market Indicators” by Colby and Meyers. Their tests indicated that
pivot point channel reversal breakouts were more reliable than trading
with the pivot point channels alone.
I took this information, along with the fact that the markets can move
with great momentum in one direction, and I started trading pivot
reversals. This led to the building of a short-term breakout trading
system.
Through much trading, I started to notice that while you can make a
lot of money trading the breakouts that there are times that the trade
fails. I’m sure you are thinking, “Well of course there are failures”. I’m
talking about the large failures, where the breakout occurs but then
reverses and closes in the exact opposite direction of the breakout.
After noticing these failures, I started tracking them and then started
trading them. As I sure you know, you learn more from your failures
than your successes and this is no different. When a failure occurs we
are positioned perfect for a complete price reversal. Throughout this
trading manual, we will be looking at pivot reversal breakout failures
that I call U-Turns.
I will cover the setup, entry, stops, and exits. This trade is not a
difficult one to learn or even implement; but the results can be very
powerful.
Page 4
Pivot Reversals
It’s important to be able to identify pivot reversal to be able to spot
U-Turn setups, so we will start with pivot reversals.
For pivot reversals, we are looking for pivot bars. There are pivot high
bars and pivot low bars. A pivot high bar is a bar that has a higher
high than the bar before it and the bar after it. A pivot low bar is a bar
that has a lower low than the bar before and the bar after it.
Example of a Pivot High Bar:
The arrow is below a pivot high bar. As you can see, the pivot high bar
has a higher high than the previous bar and the bar right after it.
Page 5
Example of a Pivot Low Bar:
The arrow is above a pivot low bar. As you can see, the pivot low bar
has a lower low than the previous bar and the bar after right after it.
Page 6
Example of both pivot high and pivot low bars:
There are four pivot low bars and three pivot high bars shown below.
The down arrows are above pivot low bars and the up arrows are
below the pivot high bars. I have not shown all of the pivot bars on
this chart, but have tried to show the more obvious ones.
Page 7
Identifying Pivots, Their Frequency and

Significance
In the first two examples above, the pivot high bar closed up and the
pivot low bar closed down. It does not matter if the pivot bar
closes up or down. You can have a pivot high bar that closes down
and you can have a pivot low bar that closes up.
With regard to the pivot high bar, we are only concerned with
the high of the bar in relation to the bar before it and the bar
after it.
With regard to the pivot low bar, we are only concerned with
the low of the bar in relation to the bar before it and the bar
after it.
You can change the frequency and significance of the pivots by

changing the amount of qualifying bars referred to before and after the
pivot bar. If you have a pivot high bar that has a higher high than two
bars before and two bars after, there would be a lower frequency of
occurrences and a greater significance as compared to looking for just
one bar before and one bar after the pivot bar.
From the trading that I have done, I have found that the more bars
you use to qualify a pivot bar, the fewer pivot bars you will find. The
lower the frequency of trades, however, the greater the chance that
the pivot will be of more significance. So, the larger the significance of
the pivot reversal, the bigger the failure when it closes in the opposite
direction. This means that you will put on fewer trades, but the
trades you put on will have a better chance of being profitable.
Page 8
Example of a Pivot High Bar with Two Qualifying Bars:
The up arrow indicates the pivot high bar. The sideways arrows
indicate that the previous two bars had lower highs and the two bars
after had lower highs, than the pivot bar.
Page 9
Example of a Pivot Low Bar with Two Qualifying Bars:
The down arrow indicates the pivot low bar. The sideways arrows
indicate that there were higher lows in the two bars before and after
the pivot low bar. You can choose however many qualifying bars you
like.
Now that you understand how a pivot reversal bar is created, let’s take
a look at a pivot reversal failure which is our U-Turn setup.
Page 10
The Setup
The setup for our U-Turn trade looks for pivot reversals that have
failed to continue to breakout, reverse, and close in the exact opposite
direction than the breakout. Basically, this is a failure of the support or
resistance area that the pivot reversal had identified.
Example of a Pivot Low Bar Failure: U-Turn Buy Setup
The down arrow indicates the pivot low bar. The up arrow indicates the
U-Turn buy setup. This setup is off of a one bar qualifying pivot
reversal, you can choose however many qualifying bars you like.
Page 11
Example of a Pivot High Bar Failure: U-Turn Sell Setup
The sideways arrow indicates the pivot high bar. The down arrow
indicates the U-Turn sell short setup. This setup is off of a one bar
qualifying pivot reversal, you can choose however many qualifying
bars you like.
Page 12
The Entry
Long Entry:
We are going to look for a U-Turn buy setup and place a buy order at
the open of the next bar.
Example of a U-Turn buy entry:
The upward-pointing arrow is below the bar of entry, which is one bar
after the U-Turn setup. Typically, a gap in the direction we are going is
a good sign that the reversal will continue in our direction.
Page 13
Short Entry:
We are going to look for a U-Turn sell setup and place a sell short
order at the open of the next bar.
Example of a U-Turn sell entry:
The down arrow is indicating where the U-Turn entry is located. This is
the entry for the short trade.
Page 14
The Stop Loss

The stop loss should be placed one fourteen day Average True Range
(ATR) above/below the entry price. The one ATR set to fourteen
averages the past fourteen days ATR and give the typical one day
move. So, with the U-Turn if we are wrong and the market moves
against us by one day’s range then we will be out of the trade. If you
have a stop that you prefer, fill free to use it.
Example of the stop loss of a U-Turn buy:
The stop loss line on the chart is set at 1 ATR set to 14 days average
below the entry.
Page 15
Example of the stop loss of a U-Turn sell:
The stop loss line on the chart is set at 1 ATR set to 14 days average
above the entry.
Page 16
The Exit
Long Exit:
The long exit is set to 2 times the Average True Range (ATR) set to 14
bar average add to the entry. If you have an exit that you use and
prefer, feel free to use it. I have traders that use a trailing stop loss
with success.
Example of a Long Exit:
As you can see from the chart, we closed the trade at 2 times ATR set
to 14 add to the entry.
Page 17
Short Exit:
The short exit is set to 2 times the Average True Range (ATR) set to
14 bar average subtracted from the entry. If you have an exit that you
use and prefer, feel free to use it. I have traders that use a trailing
stop loss with success.
Example of a Short Exit:
As you can see from the chart, we closed the trade at 2 times ATR set
to 14 subtracted from the entry.
Page 18
U-Turn Software
We support the U-Turn software in many different formats for your
convenience. However, they should all look very similar. A reading of 0
means that there are no U-Turn setups. A reading of 1 indicates a buy
setup has occurred. A -1 reading indicates that a sell setup has
occurred.
Depending on how aggressive or conservative you want to be with

your trading with dictate the setting of qualifying bar failures you are
looking for. A setting of 1 will generate the most opportunities, but is
the most aggressive and will product the most false signals. A setting
of 4 is moderate, middle to the road and a setting of 8 is the most
conservative. If you are patient and like low risk high reward with the
greatest potential for long run setups, then trade the 8 setting.
Page 19
Here is an example of the U-Turn software on the chart.
Page 20
Putting It All Together

Rules for Trading U-Turn Buys
Long Setup:
We are looking for a pivot low bar failure with a bar that closes up,
creating a U-Turn Buy Setup.
Long Entry:
Buy next bar at the open.
Long Stop Loss:
Place a hard stop below the entry: 1 Average True Range (ATR) set to
14 bar average.
Long Exit:
Sell at 2 ATR set to 14 bar average.
Note: If there is a US news announcement, then you should

wait until the news is released to place a U-Turn trade.
Otherwise, you run the risk of being stopped out due to erratic
market movement.
Page 21
Examples of trading U-Turn Buys:
Example of a Long Setup:
We are looking for a pivot low bar failure: lower low than the bar
before it and after the pivot low bar that is tested by price and fails.
The down arrow is above the pivot low bar. We are going to place a
buy order at the open of the next bar after the failure bar, indicated on
the chart by the sideways arrow.
Page 22
Long Entry:
Buy at the open of the next bar.
The entry for a U-Turn buy order is the open of the next bar after the
U-Turn setup has occurred.
Page 23
Long Stop Loss:
Place a hard stop below the entry: 1 ATR 14
The line below the entry indicates the placement of the stop loss one
average true range set to fourteen subtracted from the entry price.
Page 24
Long Exit:
Sell to close the trade at 2 times Average True Range set to 14 bar
average added to the entry price. The chart shows our setup, entry,
stop loss, and the exit of the trade. The trade was closed out at the 2
ATR set to 14.
Page 25
Rules for Trading U-Turn Sells

Short Setup:
We are looking for a pivot High bar failure with a bar that closes down,
creating a U-Turn Sell Setup.
Short Entry:
Sell short next bar at the open.
Short Stop Loss:
Place a hard stop above the entry: 1 Average True Range (ATR) set to
14 bar average.
Short Exit:
Buy to close at 2 ATR set to 14 bar average.
Note: If there is a US news announcement, then you should

wait until the news is released to place a U-Turn trade.
Otherwise, you run the risk of being stopped out due to erratic
market movement.
Page 26
Examples of trading U-Turn Sells:
Example of a Short Setup:
We are looking for a pivot high bar failure: higher high than the bar
before it and after the pivot high bar that is tested by price and fails.
The sideways arrow is pointing at the pivot high bar. We are going to
place a sell short order at the open of the next bar after the failure
bar, indicated on the chart by the down arrow.
Page 27
Short Entry:
Sell short at the open of the next bar.
The entry for a U-Turn sell order is the open of the next bar after the
U-Turn setup has occurred.
Page 28
Short Stop Loss:
Place a hard stop above the entry: 1 ATR 14
The line above the entry indicates the placement of the stop loss one
average true range set to fourteen subtracted from the entry price.
Page 29
Short Exit:
Buy to cover the trade at 2 times Average True Range set to 14 bar
average subtracted to the entry price. The chart shows our setup,
entry, stop loss, and the exit of the trade. The trade was closed out at
the 2 ATR set to 14.
Page 30
Final Thoughts
The U-Turn Trading System uses the fundamental movement of the
market to capture large moves. It was important to base this system
in the fundamentals, so that it would have the robustness need to
survive in the Markets and have the longevity for years to come.
The U-Turn Trading System also allows you the flexibility to trade
aggressively or conservatively depending on your trading objectives.
In developing the U-Turn Trading System , I sought to create a system

that was both simple enough for new traders to use successfully, while
still maintaining enough financial reward to keep the experienced
traders interested.
I feel I have done that.
I’m confident that if you take the time to trade this system, that you
will be able to benefit from this profitable trading system.
Good trading,
Page 31

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U-Turn Trading

NO INVESTMENT ADVICE. The information contained in this product has

INDEMNITY. You agree to indemnify and hold Sharptrade Partners, LLC

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Pivot Frequency & Significance 8

The Stop Loss 15

Putting It All Together:

Rules for Trading U-Turn Sells 26

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

This started me to thinking about pivot points, pivot point reversals

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a Pivot High Bar:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a Pivot Low Bar:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of both pivot high and pivot low bars:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Identifying Pivots, Their Frequency and

You can change the frequency and significance of the pivots by

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a Pivot High Bar with Two Qualifying Bars:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a Pivot Low Bar with Two Qualifying Bars:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a Pivot Low Bar Failure: U-Turn Buy Setup

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a Pivot High Bar Failure: U-Turn Sell Setup

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a U-Turn buy entry:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a U-Turn sell entry:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

The Stop Loss

Example of the stop loss of a U-Turn buy:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of the stop loss of a U-Turn sell:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a Long Exit:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Example of a Short Exit:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Depending on how aggressive or conservative you want to be with

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Here is an example of the U-Turn software on the chart.

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Putting It All Together

Buy next bar at the open.

Long Stop Loss:

Sell at 2 ATR set to 14 bar average.

Note: If there is a US news announcement, then you should

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Examples of trading U-Turn Buys:

Example of a Long Setup:

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Buy at the open of the next bar.

© 2014 Sharptrade Partners LLC - All Rights Reserved http://www.InvestingLab.com

Long Stop Loss:

Place a hard stop below the entry: 1 ATR 14