Episodic pivot
A big gap on news that changes a stock's story, after a long period of neglect, can start a multi-month move. Buy the opening range high.
Try Episodic pivot on a real day
A real market day with the date hidden. Run the checklist on the chart, then buy, sell or stay out: the real candles answer.
Check every point of the list before you decide. Stay out if the setup is not there.
Episodic pivots were popularised by the Swedish trader Kristjan Kullamägi ("Qullamaggie"), building on ideas from Pradeep Bonde. The setup looks for a fundamental change, usually earnings or a major announcement, that the market has to reprice.
Why it works
A stock that has gone nowhere for months is not owned by many funds. A surprise that changes its outlook forces those funds to buy over days and weeks, not in one session.
The gap and volume on the first day show that the news is significant. Buying the opening range high confirms that buyers continue after the open.
The rules
Setup
- A gap of at least 10% on news, after months of sideways or falling price.
- Volume in the first hour well above the daily average.
Entry
- Buy when price breaks the high of the first 5 to 60 minutes (opening range high).
Stop loss
- At the low of the day.
Exit and management
- Sell part after 3 to 5 days; trail the rest with the 10 or 20-day moving average.
Filters that improve it
- The news must be material: earnings surprises, new contracts, regulation.
- Skip gaps into a long overhead resistance.
Worked example
Illustrative stock example: a stock flat at $40 for six months reports earnings and gaps to $48. The first hour range is $47 to $50. A break of $50 triggers the buy, stop $47. Partial sale at $56 after four days; the rest trailed with the 10-day average.
Illustrative numbers, not a recommendation.
Common mistakes
- Buying gaps without news or on minor news.
- Using a stop wider than the day's low.
How to practise it
In Candlemind choose a stock market and read the first hour after the open. Practise marking the opening range and only acting on the break.
Pre-trade checklist
- Material news
- Gap of 10% or more
- Months of neglect before
- Buy the opening range high
- Stop at the low of the day
Frequently asked questions
What is an episodic pivot?
A sudden repricing caused by news, after which a stock can trend for weeks or months.
Does this work in forex?
It is a stock setup: currencies rarely gap and have no earnings.