Parabolic Framework and Trading Hacks

Hernan Segovia
BOH Society
www.bohsociety.com

Investagrams Traders’ Summit 2018

08 December 2018
Samsung Hall, SM Aura Premier
DISCLAIMER
I make no representation that the information contained herein or any of the analytical tools
or reports referenced herein are accurate, reliable, complete, or appropriate for use by all
investors in all locations.

I am not using this document or this presentation to provide investment or other advice to
you or any other party. The materials and information contained herein are intended for
informational and educational purposes only and should not be regarded as
recommendation. Performance after attending this 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 analytic tools
referenced herein.

2
HELLO, I AM SPYFRAT.
SPYFRAT’S TRADING SYSTEM
Trading System:
Bollinger Bands (BBand) = 50-period with 0.20 standard deviations
Relative Strength Indicator (RSI) = 30-period

Parabolic Framework:
Parabolic Theory
Parabolic High Risk (PHR)
Extreme Parabolic High Risk (ePHR)

Trading Hacks:
20 percent rule
Bebemon trade set-up
MY TRADING SYSTEM
SPYFRAT’S TRADING SYSTEM
Principal
Components:
Bbands(50, 0.20)
Bollinger Bands
50-period and
0.20 width

Relative Strength
Indicator
RSI(30) 30-period
WHY USE A CUSTOM BOLLINGER?
▪ John Bollinger’s Bollinger Band uses Bband(20, 2), which he uses to measure price volatility.

▪ I use a custom Bband(50, 0.20) to enclose the 50-day simple moving average inside an
envelope to measure trend volatility.

▪ My custom Bband is like the Keltner channel but is more dynamic since it can adjust quickly
to changes in the trend.

▪ I particularly like it when the Bband contracts and becomes “slimmer” as it often signals an
area where a big move can occur. This info cannot be captured by a standalone 50-period
simple moving average.

▪ This system generates buy and sell crossover signals between price and the custom Bband.
The Bband can also be used to define dynamic support and resistance across different time
frames.
WHY USE A CUSTOM BOLLINGER?

BBAND(50, 0.20) KELTNER(50,0.20)

WHY USE A CUSTOM BOLLINGER?

BBAND(50, 0.20) KELTNER(50,0.20)

WHY RSI 30 NOT RSI 14?
RSI30 vs RSI14

A. RSI14 signaled
DD overbought
at low 20s versus
RSI30, which
signaled start of
parabolic move
A B
B. RSI14 again
signaled
overbought at
40 versus RSI30,
which signaled
resumption of
parabolic run
PARABOLIC FRAMEWORK
HOW TO DEFINE A PARABOLIC STATE
▪ A stock is in a parabolic state once RSI(30) is above 70.

▪ Once in parabolic, there is a strong chance that price can move

even higher despite overbought readings (on other RSI settings).

▪ In short, “walang overbought overbought when in parabolic”. ☺

▪ A parabolic state can be triggered on any time frame (i.e. weekly,

daily, hourly, minutes) in a high RSI environment.

▪ For example, if a stock’s RSI(30) exceeds 70 on the weekly chart

then it is parabolic on the weekly. If RSI(30) exceeds 70 on the
daily timeframe then it is parabolic on the daily chart.
HOW TO DEFINE PARABOLIC HIGH RISK
▪ A stock is in Parabolic High Risk (PHR) when,
▪ Both daily and weekly RSI(30) are greater than 70, and
▪ RSI Daily > RSI Weekly

▪ Call to Action: Slice up and trail stop.

▪ Application of Senor Pethuel’s Modified Parabolic System at this

site https://medium.com/@pethuel03/parabolic-theory-based-
stock-trading-c92e0be53230.
HOW TO DEFINE EXTREME PARABOLIC HIGH RISK
▪ A stock is in Extreme Parabolic High Risk (ePHR) when both daily
and weekly RSI(30) are greater than 80.

▪ An ePHR signals that the stock is likely to top out, it’s higher risk,
and extremely volatile. ePHR also suggests FOMO condition that’s
unsustainable and will likely reverse and trigger a deep correction.

▪ Call to Action: Sell on sight. Sell when it’s easy. Don’t wait for the
stampede. Bid and offer will widen when price reverses and panic
sets in. Bid volume will dry up and this leads to a “paraburst”.
ALL PARABOLICS POP AND ALWAYS END IN TEARS
▪ A parabolic burst or “paraburst” is an event that takes place at the end of a
parabolic run.

▪ While price can transition from uptrend to range to downtrend in an orderly

manner, always remember that the distribution phase happening while
price is moving up and participation and volume is rising.

▪ This means that price can transition from uptrend to downtrend without
moving sideways in a paraburst.

▪ When “new money” stops coming in, price can reverse and leave the
investing public with deep losses.

▪ A paraburst can be traded on deep dips, but only if you know what you’re
doing. Bounce trades from a paraburst should be sold into.
KEY RISK WHEN TRADING PARABOLICS
▪ When a stock is in parabolic, the stock has a higher risk. While
price can move higher exponentially, the trade-off is extreme
volatility. In other words, you can lose a lot chasing a stock in
parabolic.

▪ Trading stocks in parabolic can be profitable, but only if you

know what you’re doing. Know the risk and prepare yourself
for wild swings as price moves higher.

▪ TIP: Only trade the parabolic within the time frame it occurs.
Don’t assume that parabolic run will persist at higher time
frames.
EXAMPLES OF PARABURST
BEARISH WEDGE EARLIEST SIGN OF A TOP
BEARISH WEDGE EARLIEST SIGN OF A TOP
BURJ KHALIFA: WORST CASE SCENARIO IN A PARABURST
BURJ KHALIFA: WORST CASE SCENARIO IN A PARABURST
C

A
BURJ KHALIFA: WORST CASE SCENARIO IN A PARABURST
this is the burj khalifa's pattern coined by Jaycob Yedra of AP Sec. may mga hint's kung papano natin
maiwasan to.. prob lang minsan, sadyang gusto talaga ng tao ng one shot retirement bagger.
unfortunately very common na mentality sa mga heroes nating ofw (at least sa mga clients ko all
these years). kasi sobrang hirap ng buhay sa ibang bansa and kapag na hype na yun isang ofw,
inaambisyo rin nya na maka bagger rin sya. in short yun inaakala ng marami na yun stock market ang
magiging ticket to way home nila.. until the reverse happened at na stuck yun puhunan. di na po
bago tong parabolics and ive been sharing this ng libre.. pero sadyang kokonti lang talaga ang
interesado, or di patok lang.. kahit yun mga turo ni senor fred (the responsible trader), ewan,
sobrang ganda nun pero kahit yun mga post nya ay rarely got the likes.. same rin sa mga kasama ko
sa boh .. yun algos dun, the blackbox, mga parameters, it's a new universe kung baga pero kapag ng
focus na ang isang investor sa process, talaga ma prove mo sa sarili mo na mag improved greatly yun
trading discipline and consistency mo. nadaanan ko yun libre for 20yrs, kaso, yun nga lang, di ka
seseryosohin, come and go lang ang peg, sa umpisa lang ang urge, ningas cogon lang. pero kung may
bayad, seseryosohin ka, susulitin yun gusto nilang matutunan, wala ng next time next time, kasi may
bayad, may subscription. nasa mentality na ng trader yan, kahit ilang freebies pa kung walang
passion talaga na matuto, olats pa rin.
nabubuo ang burj khalifa dahil naging parabolic to na kung saan kapag nasa parabolic state na
ay walang overbought condition dahil parabolic lives in a high rsi environment. pero sa mga
nagdaan na ganitong laro at marahil sa experensya na rin (maganda at pangit man) ay may
bagay tayong napupuna at naihasa. para ma gauge ang parabolic, ng lagay tayp ng risk guide,
eto yun phr and ephr na kung saan na explain natin sa mga previous post. kung ang isang stock
ay ng ka EPHR, malaki ang chance nito na magkakaroon eto ng mamalim na selloff dulot ng
panic. ang burj khalifa at may malaking spike (pls see chart A B C) na kung saan ang pag akyat
nito ay HIGHLY EXTREME, eto yun tinatawag na fear of missing out or FOMO RUN, eto yun takot
ka maiwan dahil akala mo ay di ka na makakabili kung hindi ka hahabol. eto rin yun feeling na
pinapanuod mo yun pagakyat nun isang stock na may kaba sa umpisa pero sa sa kalaunan yun
kaba na yun ay naging daan ng di mo na matiis na tingnan yun presyo na umaakyat at bumili ka
na rin. and extreme high risk ay ng papahiwatig the price in subject ay masyado ng emotional at
short term in nature, meaning indi sya sustainable. unfortunately kapag ng ka fomo run na, ang
burj khalifa pattern ay vulnerable sa paraburst (ang meaning nasa prev post rin). nun ng ka
ePHR ang $ISM, may paalala na tayo sa BoH Society at bookaka na maging extreme caution na.
PARABURST EXCEPTION: GOLDEN BRIA HOLDINGS

ORDERLY TRANSITION INTO A TRADING RANGE

THE 20 PERCENT RULE
THE 20 PERCENT RULE
The 20 percent rule is a rule for trading various scenarios.

I use the 20 percent rule for setting up the following trades:

✓Major support from a price high after a 20% correction; bearish if

price falls more than 20%.
✓Major resistance from a price low after a bottom reversal and a stock
gains 20%; bullish if price gains more than 20% and keeps this
advance.
✓Trigger for momo and ceiling candidates.
✓Pivot level for follow-through play.
USING THE 20 PERCENT RULE AS MAJOR SUPPORT

bounce
average bounce 5 to 7 percent

20% decline
Computation: high x 0.80 = 20% price level
from high 1 2

Notes:
• The first 20 percent correction will normally have a bounce; an
overshoot is common but still has high success rate for a
bounce.

• But a second test of support will have a high likelihood of

breaking through major support so avoid.
NATURAL GAS

The beauty of the 20% rule…

WTI OIL

The break
below 20%
pivot triggered
sharper
downside

Approx. another 20%

downside risk after
breaking through 20% pivot
USING THE 20 PERCENT RULE FOR FOLLOW-THRU PLAY
How to use 20% pivot rule:
1. After a ceiling day, price must gain +20% on the
follow-through day to signal strong momentum.
1.80
2. If open price on follow-through day is less than a
+20% gain then take profits/slice.
1.50
3. If open price advanced more than +20% then use
open price as pivot. Slice/sell if price goes below
open price. Sell all if gain falls below 20% gain.
ceiling = price up 50 percent

Example:
1. If price opens 1.80 or higher then hold. Be
disciplined and ride winner.
1.00 2. If price opens below 1.80 but above 1.50, then
sell/slice since it’s below the 20% pivot.
3. If price opens at 1.83 and rallies to 1.90, slice if it
breaks below 1.83 open. Sell all if below 1.80.
DOUBLE DRAGON
ECP
NOTES:
1. Follow-through on
11/28 must breach
20% at open / early
trading. Otherwise
ditch.

2. A stock that completes

a third day ceiling are
very risky.

3. Trading a fourth day

ceiling play is silly and
will always end in
tears for those who
chase.
ECP
NOTES:
1. On 11/28 ECP opened
at 26.00 with high of
26.45, and recovered
well from the low of
13 to close at 22.40

2. Early formation of
precedence pattern
equates to wide range
and great volatility,
until said pattern
materialized

3. Precedence pattern
can be wedgies,
penant, flag, triangles
DAVIN (I)
DAVIN (II)
NOTES:
1. New high of day
means 2.70 x 0.90 =
2.43 max momentum
correction to stay
bullish.

2. Ceiling play will

typically have two
attempts. This means
that 2.46 needs to
hold after hitting 2.74
otherwise olats. Any
correction > 10% after
a parabolic is a
momentum killer.

3. At oversold levels after

a paraburst, can trade
bounce, but must sell
quickly the next day.
ANATOMY OF A CEILING PLAY
THE 20 PERCENT RULE AS PIVOT FOR IPOs
NOTES:
MRSGI IPO + 20% = 4.79 1. Use 20% as first day
hurdle rate for
MRSGI IPO HIGH = 4.49 = +12.5% GAIN assessing strength of
an IPO stock.

2. If IPO stock gains less

MRSGI IPO PRICE = 3.99 than 20% on first day,
ditch.

3. Sell at ceiling if bid

volume diminishing.

4. Sell if price corrects

10% after hitting
ceiling.
MY BEBEMON TRADE SET-UP
MY BEBEMON TRADE SET-UP
NOTES:
1. Bebe or bibe refers to
a price transition
around or above the
50-period moving
average that looks like
a duckbill. That’s for
the “pa-arte” pattern.
Bebemon stands for
Bollinger Band
Monster.
2. Can be traded two
ways: a) around the
50-prd MA or as the
bill is being formed, or
b) on the pattern
breakout.
3. Stop loss placement
below the 50-prd MA
or inside the pattern
for breakout traders.
BHI
PXP
BCOR
BCOR
EUR/USD
EUR/USD
WTI
WTI
MY BEBEMON TRADE SET-UP
NOTES:
1. Bebemon or Bollinger
Band Monster can be
a one shop trade set
up. That is, it can be
a) Bottom Play
b) Reversal
c) Trend following
d) Momo play
e) Pattern formation
f) Breakouts
g) Parabolics
MY BEBEMON TRADE SET-UP
NOTES:
1. Bebemon or Bollinger
Band Monster can be
a one shop trade set
up. That is, it can be
a) Bottom Play
b) Reversal
c) Trend following
d) Momo play
e) Pattern formation
f) Breakouts
g) Parabolics
MY BEBEMON TRADE SET-UP
NOTES:
1. Bebemon or Bollinger
Band Monster can be
a one shop trade set
up. That is, it can be
a) Bottom Play
b) Reversal
c) Trend following
d) Momo play
e) Pattern formation
f) Breakouts
g) Parabolics
Bebemon Watch - ABS
Bebemon Watch – X Daily
Bebemon Watch – X Weekly
Bebemon Watch - HLCM
Bebemon Watch – CHP (NOT ALL HAVE BEEN PROFITABLE)
THE HOLY GRAIL
 THANK YOU!

TO GOD BE THE GLORY!

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